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Page added on January 12, 2017
Oil Discoveries Seen Recovering After Crashing to 65-Year Low
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Explorers found 3.7 billion barrels in 2016: Wood Mackenzie
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Last year will probably be the low point for discoveries
The amount of oil discovered last year was the lowest since the 1950s as explorers slashed spending amid the worst downturn in a generation, according to Wood Mackenzie. The good news: It can probably only get better from here.
Oil companies found only 3.7 billion barrels of so-called conventional crude in 2016, 14 percent less than the previous year and the lowest amount since 1952, according to updated figures from the Edinburgh-based consultant. The results for both 2016 and 2015 are better than forecast a few months ago, but still put discovered oil volumes at little more than a tenth of the yearly average since 1950.
Spending on exploration has been gutted since oil prices started falling in 2014 and may drop further this year, said Andrew Latham, Wood Mackenzie’s vice president for global exploration. However, by making operations more efficient, focusing on easier targets and paying lower fees to contractors oil companies are getting more for their money. Coupled with renewed industry optimism sparked by an OPEC-led deal to curb output and boost prices, that could mean exploration results won’t get any worse, he said.
“We’ll probably see 2016 as the turning point, the low point,” Latham said. “There will be a lag of at least a year, but we do think that investment will start to grow again and volumes will come back.”
Oil companies reduced spending on exploration to about $40 billion last year from $100 billion in 2014, and could invest as little as $35 billion this year, Latham predicted. Lower budgets meant fewer wells drilled: 431 in 2016, or about a third of the activity two years earlier. This year, cost savings mean more wells could be drilled for less money.
Explorers are now passing on the most difficult wells in very deep reservoirs or in harsh environments such as the Arctic. They’ve also lowered the drilling duration of a typical offshore well to 55 days from 75 days, Latham said. Among the 40 leading exploration companies Wood Mackenzie tracks, net spending per well could fall to $40 million from $86 million in 2014, he said.
Total expenditure on exploration could rise to $40 billion to $45 billion in 2018 and further in 2019 if the oil price recovery endures, Latham said.
Even as more exploration yields additional discoveries in the years ahead, the recent dismal results will have an effect on global oil supplies in five to 10 years, Latham said. If exploration remained at current levels, the world could see a supply shortfall of 4.5 million barrels a day by 2035, Wood Mackenzie estimates.
11 Comments on "Oil Discoveries Seen Recovering After Crashing to 65-Year Low"
shortonoil on Thu, 12th Jan 2017 7:19 pm
3.7 Gb; 11% of world consumption.
DMyers on Thu, 12th Jan 2017 9:30 pm
Hard to believe so many people thought that a fifty-odd year trend carried some weight. But apparently, it can all be traced backwards from the nadir of 2016. So the decline seen all this time was really a temporary result of what was going to happen in 2016.
After coming to this realization, one has to see that new discoveries will be racked up in bundles as soon as optimism returns to the investment community. 2016 was the teleological low point of oil discovery. Next stop, mega-oil century. Up from the ground comes a bubblin’ crude. Look for it! It’s out there!
makati1 on Thu, 12th Jan 2017 9:49 pm
DMeyers, I want some of what you are snorting. I LMAO at your comment. Such a delusion! I hope it was satire … for your sake.
bahamased on Fri, 13th Jan 2017 6:16 am
Well of course it’s going to come back, just look at the chart and see how much extra new oil they found in years that oil was over $100!
Oh, wait a minute, ……never mind
Midnight Oil on Fri, 13th Jan 2017 6:52 am
Blame it on Global Warming…that uptick was just hiding under all that ice!
Great Going Exxon-Mobile! Rex Tillerson now will were more ice will melt faster and new discoveries be uncovered!
Believe me, I couldn’t make this stuff up!
shortonoil on Fri, 13th Jan 2017 8:42 am
“Up from the ground comes a bubblin’ crude. Look for it! It’s out there!”
At $50/barrel they will have a hard time replacing the toilet paper in the men’s bathroom.
DMyers on Fri, 13th Jan 2017 9:04 am
Mak,
Thanks for laughing at me. I hesitate to reveal the pharmaceutical source of my inspiration, out of fear that the knowledge alone could put you on Duterte’s death list.
Sissyfuss on Fri, 13th Jan 2017 10:04 am
The discovery trend in the chart, steadily downward, seems to be disscconected from price variation. But don’t worry. The golden boy is going to make a deal that even Gaia can’t refuse.
joe on Fri, 13th Jan 2017 11:16 am
Optimism. Thats all. Ok fine, I send a ruv, and find so many millions of barrels of oil way out in the ocean, opec manipulates prices at and then I book these areas as ‘discoveries’ and try to sell the info to the highest bidder, except tight oil comes and along and makes a mockery of the old system. Oil is historically cheap due to dollar inflation and the US is in debt for a little over 100% of GDP now thanks to Obama. Trump can take the US to maybe 120% in another debt splurge, then the liquidation sale has to begin. Yet even at 50 we have had to introduce massive efficiently laws and even electric cars to compensate for the reducing return on energy invested in oil, so oil feels expensive and will get more expensive if Opec gets its way.
onlooker on Fri, 13th Jan 2017 1:38 pm
Discovery is one thing, getting it in an economically viable manner is quite another. I suppose with our super duper techno gadgets we can see all the way down to the center of the Earth. Wait for it wait for it, eureka we discovered Oil right near to core of the Earth. haha we are all saved. Love the satire Dmeyers.
twocats on Sat, 14th Jan 2017 9:52 pm
‘that could mean exploration results won’t get any worse, he said. “We’ll probably see 2016 as the turning point, the low point,” Latham said. “There will be a lag of at least a year, but we do think that investment will start to grow again and volumes will come back.”’
So 2016 isn’t the low point? It sounds like he’s saying 2017 (the lag year) is going to be awful for discoveries. Sounds like burying the lead to me.