Energy investors fared well in 2004 as shareholder returns reached record levels, but there were snags-upstream costs continued to rise and drilling and oil-service capacity is being strained, according to John S. Herold Inc. and Harrison Lovegrove Co. in their the 2005 Global Upstream Performance Review. Reserves and production growth for 2001-04 among the companies surveyed was moderate, the firms report. Oil reserves were flat at 143.4 billion barrels while natural gas reserves grew 5% to 562.8 trillion cubic feet. Since 2000, gas reserves have grown by 100 trillion cubic feet while gas production is up 17.6%, according to the report. Producers' reserve-life index continues to slide, the firms add, while the cost of reserve replacement and finding and development (F&D) keeps climbing. "On a barrel-of-oil-equivalent (BOE) basis, the index has slipped in both the world outside North America and worldwide, while North America's has managed to creep upward slightly." The analysis shows that, in the past five years, F&D has risen 15%. The firms expect "further sharp advances...in 2005 and beyond." In the U.S., reserve-replacement costs rose from approximately an average of $8.15 per BOE in 2001 to approximately $10.20 last year. For more on this, see the November issue of Oil and Gas Investor. For a subscription, call 713-993-9320, ext. 126.