Despite lower future demand due to the COVID-19 pandemic and a transition to alternate forms of energy, the world risks insufficient oil supplies to meet its needs through 2050 - unless exploration speeds up significantly and capital expenditure of at least $3 trillion is made by the industry, according to a report by Rystad Energy.
To meet global cumulative demand over the next 30 years, undeveloped and undiscovered resources of 313 billion barrels of oil need to be added to currently producing assets, Rystad said in a Dec. 9 release.
“The scope of exploration will have to expand significantly,” said Palzor Shenga, Rystad senior upstream analyst. “Unless we see a momentous transition in the global energy mix sooner than currently expected, or a much faster development pace than the current norm, upstream players may have to more than double their conventional exploration efforts in order to meet global oil demand through 2050.”
To meet projected demand, exploration programs will have to discover a worthy-to-develop resource of 139 billion new barrels of liquids by 2050, “an impossible task if this decade’s low exploration activity levels persist,” Rystad said.
Rystad said it set the target high because not all existing discovered volumes are profitable to develop.
“In theory, the total undeveloped supply would amount to 248 billion barrels of oil between 2021 and 2050,” Rystad said. “However, when we dive deeper into these discoveries and look at their discovery decade and current status, we find that about 74 billion barrels are highly unlikely to materialize and need to be replaced by new discoveries.”
In global conventional exploration potential, there are two main sources for new volumes: further appraisal of existing fields and resources, and new discoveries, it said.
Based on discovery rates of the current decade and the latest trends, Rystad expects global conventional discovered liquid volumes could settle at around 4 billion barrels per year, with an average discovery size of around 40 million barrels, Rystad said, adding that explorers would need to announce at least 100 new conventional discoveries each year at that rate to meet demand.
OPEC+ moderates 2021 increase
Oil prices have held steady after the Organization of the Petroleum Producing Countries and its allied producing countries held back on a planned Jan. 1 production increase of 2 million barrels per day, agreeing to an increase of just 500,000 bpd.
The cartel made the announcement following negotiations at its 12th OPEC and non-OPEC Ministerial Meeting Dec. 3.
OPEC+ had planned to reduce its existing production cuts of 7.7 million bpd to 5.7 million bpd, but now will observe a 7.2 million bpd reduction after a new spike in worldwide COVID-19 cases caused a slower recovery of oil demand than that projected by OPEC when cuts were implemented in the spring.
Alaska North Slope crude popped 66 cents on the news Dec. 3, to close at $47.87 per barrel. West Texas Intermediate jumped 36 cents Dec. 3, to close at $45.64, while Brent jumped 46 cents to close at $48.71.
On Dec. 8, ANS closed at $48.67, up 73 cents; WTI closed at $45.60, down 16 cents; and Brent closed at $48.84, up 5 cents.
WTI was trading at $45.69, and Brent traded at $48.86 at Petroleum News press time Dec. 9.
Renewed lockdowns due to more stringent COVID-19 containment measures continue to impact the global economy and oil demand recovery, with prevailing uncertainties over the winter months, OPEC said in a Dec. 3 statement, adding that it is vital that its Declaration of Cooperation participants and all major producers remain fully committed to efforts aimed at balancing and stabilizing the market.
- STEVE SUTHERLIN
