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The discovery of new oil and gas hit an all-time low in 2017 according to a report published recently by Rystad Energy, an oil and gas consultancy firm.
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In 2017, it is estimated that less than seven billion barrels of oil were found as of Thursday, December 21st. While the report does not take into consideration some of the discoveries, which may be announced in the 2017 reports produced by energy companies, Rystad projects a maximum 10% increase from those findings.
The discovery of new oil has consistently fallen every year since since 2014, when oversupply triggered a crash in prices by more than half, forcing many upstream producers to restructure spending and exploration plans. However, the report states that the crash in prices isn´t the only reason for the failure to find new resources per field.
“We haven’t seen anything like this since the 1940s,” says Sonia Mladá Passos, Senior Analyst at Rystad Energy. “The discovered volumes averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement ratio* in the current year reached only 11% (for oil and gas combined) - compared to over 50% in 2012.” According to Rystad’s analysis, 2006 was the last year when reserve replacement ratio reached 100%; largely thanks to the giant onshore gas field Galkynysh in Turkmenistan.
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Not only did the total volume of discovered resources decrease – so did the resources per discovered field. An average offshore discovery in 2017 held ~100 million barrels of oil equivalent, compared to 150 million in boe (barrel of oil equivalent) 2012. “Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that over 1 billion boe discovered during 2017 might never be developed”, says Passos.
The top three countries regarding discovered volumes in 2017 were Senegal, Mexico and Guyana.
“While there have been some notable successes this year, we have to face the fact that the low discovered volumes on global level represent a serious threat to the supply levels some ten years down the road,” says Passos. “Global exploration expenditures have decreased year-over-year for three consecutive years now, falling by over 60% from 2014 to 2017."
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