HOUSTON – Wood Mackenzie claims the global oil market could face a supply shortfall of 4.5 MMb/d by 2035 if current discovery rates do not pick up.
The volume of liquids proven annually has more than halved over the period from 2008-2015.
Dr. Andrew Latham, vice president of exploration research at Wood Mackenzie, said: “In the last four years the industry has seen disappointing - largely gas prone - exploration results, with the volume of liquids discovered annually falling from around 19 Bbbl between 2008 and 2011 to 8 Bbbl between 2012 and 2015.
“The price downturn has resulted in large reductions in exploration spend and activity levels have been significantly impacted - just 2.9 Bbbl of liquids were discovered globally in 2015. We currently expect the industry to invest $40 billion per year in exploration and appraisal over 2016 to 2018 - less than half its investment during 2012 to 2014.”
Sizable discoveries made during the 2000s, when budgets and exploration activity peaked, contain substantial volumes of oil that are still to be produced, which should ensure supply growth in the medium term, Dr. Latham added.
“Conventional exploration success during the 2000s could add 18 MMb/d by 2025, in addition to increasing tight oil recovery. However, the shift in the industry’s focus towards exploring smaller near field opportunities with lower cost bases and shorter lead times, means that fewer large, high risk frontier finds are likely to be made in the near term.”
Wood Mackenzie estimates that more than 10% of global liquids supply by 2035 will come from conventional volumes yet to be discovered, withAfrica, Latin America, and North America accounting for around 60% of those volumes.
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