With the focus on cost-efficiency and belt-tightening all round, it’s easy to neglect that this industry needs to keep finding oil and gas.
It will come from various sources—aspects such as EOR techniques are crucial to “finding” reserves where they already exist but that remain locked underground. Every extra percent released from known reserves is a new discovery.
But having spent time with pre-eminent explorationists at a recent event in London, the importance of identifying new and neglected plays and the use of the latest seismic technologies remains arguably the most vital factor. If we don’t find new reserves, we’re done.
Fortunately we have a good track record. Global oil reserves have risen consistently, standing at 700 Bbbl in 1981 and more than doubling to 1.67 Tbbl by 2012—despite 850 Bbbl being produced in between. In the past 30 years the industry has found 20 Bboe to 25 Bboe of conventional resources annually.
As Richard Herbert, COO, exploration at BP, said at the PETEX event: “The industry has been extremely successful in renewing itself and growing its resource base, and exploration has played a big part in this.”
He highlighted the dramatic change brought about by unconventionals, which have raised estimates for oil-in-place by about 50% from 30 Tbbl to 45 Tbbl.
Although the OECD world has limited forecast growth, the non-OECD world’s energy demand is still soaring, fed by population growth and rising incomes.
Conventional offshore areas such as Brazil and West Africa will continue to play their part, along with growing global gas resources longer term, but Herbert pointed out, “Having said all of that, when you add together all the conventional resources that have been found in the last decade, they still don’t match the enormous quantities of resource that have been unlocked in North America in unconventional resources.”
Putting that in perspective, with the U.S. having grown its Lower 48 production from almost zero to 4 MMbbl/d of tight oil, the impact has been enormous. “It’s akin to adding another OPEC country, bigger than any other apart from Saudi Arabia,” Herbert said.
Another explorationist also used the Saudi Arabian analogy. Alistair Milne, Shell’s vice president, Sub-Saharan Africa, calculated the industry needs to add 700 Bbbl of oil reserves just to replace the next two decades of production, saying, “To meet this demand the world will need to add new production of some 40 MMbbl/d of oil in this decade from fields that haven’t been developed yet!” This is like adding four times what Saudi Arabia produces today to meet that, he said.
I’m an optimist myself, and with evolving exploration technologies opening up fresh opportunities, the industry should be also.
BP’s Herbert agreed, “The future of exploration is difficult to predict. But I do believe that explorers have to be optimists, and the industry has a long and distinguished track record for finding the oil and gas that the world demands,” he said.
Recommended Reading
CERAWeek: LNG to Play Critical Role in Shell's Future, CEO Says
2024-03-19 - Sawan said LNG will continue to play a critical role adding that LNG currently makes up around 13% of gas sales but was expected to grow to around 20% in the coming 15 to 20 years.
Liberty Energy CEO: NatGas is Here to Stay as Energy Transition Lags
2024-03-27 - The energy transition hasn’t really begun given record levels of global demand for oil, natural gas and coal, Liberty Energy Chairman and CEO Chris Wright said during the DUG GAS+ Conference and Expo.
US Expected to Supply 30% of LNG Demand by 2030
2024-02-23 - Shell expects the U.S. to meet around 30% of total global LNG demand by 2030, although reliance on four key basins could create midstream constraints, the energy giant revealed in its “Shell LNG Outlook 2024.”
Exclusive: Renewables Won't Promise Affordable Security without NatGas
2024-03-25 - Greg Ebel, president and CEO of midstream company Enbridge, says renewables needs backing from natural gas to create a "nice foundation" for affordable and sustainable industrial growth, in this Hart Energy Exclusive interview.
Global Oil Demand to Grow by 1.9 MMbbl/d in 2024, Says Wood Mac
2024-02-29 - Oil prices have found support this year from rising geopolitical tensions including attacks by the Iran-aligned Houthi group on Red Sea shipping.