Jan 28, 2020
But they were less than a third of the volume of oil consumed in 2019!
The world still celebrates the modest increase in discoveries of oil resources in 2019, after a period of several years of discoveries far below those of the years until 2015 (Rystad Energy, 2020). Still, even in those years with major discoveries, the world still discovered far less new oil each year than it consumed from the known stock.
Since approximately 1984, the world has not discovered as much oil as it produces, year by year. Just look at the world oil production data, informed by BP reports, for example (BP, 2020), and compare with the history of world oil discoveries, monitored until a few years ago by the entities that monitored peak oil, such as Peak-Oil.org and others (The Oil Drum, 2008).
Beginning in 1984, when discoveries and global production tied at approximately 20 billion barrels (equivalent to approximately 55 million bopd), consumption and production skyrocketed ahead of the discoveries as emerging economies increased their demand enormously for oil. During that period, the discoveries had ups and downs, but each subsequent decade saw significantly total drop.
According to the recent Rystad Energy report (Rystad Energy, 2020) on the world’s oil discoveries in recent years, in 2019, oil production and equivalent consumption reduced known oil reserves by approximately 37.2 billion barrels, while the 2019 discoveries added only approximately 12.2 billion barrels to world stocks.
However, the tendency to replace a smaller and smaller portion of the volume produced should continue, and even accelerate, in the coming years. This is due to the fact that, inexorably, the era of oil will end, and it will certainly happen during this century. Demand for oil will not be cleared, but oil producers will no longer be the dominant players in the world economy.
It would be useless to continue investing money and efforts in the search for new discoveries, if they will never be produced after the end of the oil age. It is a simple logic that any oil company in the world understands, even state-owned companies in countries whose economies depend to a large extent on oil production, like many members of OPEC, including giants in the sector, such as Saudi Arabia, Kuwait, Iran, Iraq and others.
In this way, an increasingly smaller share of oil resources produced globally needs to be replenished each year. And this annual replacement of reserves will need to be increasingly represented by discoveries of large oil accumulations (reservoirs), with characteristics of resilience in relation to the energy transition that will accompany the arrival of the end of the oil era. This means making discoveries that have high productivity and low production costs.
The new discoveries will need to allow viable production even at lower prices, which will be the reality, as other energy sources become more competitive and displace hydrocarbons from the world energy matrix. Investing in new discoveries will only pay off if they allow low cost production, with established production techniques, and with the least possible environmental impact.
It is not surprising, therefore, that the Brazilian pre-salt is emerging as the oil province that attracts more attention and investments, on a global level. It is precisely in the Brazilian pre-salt where some wells achieve a production of more than 60 thousand bopd (not only in a single well, but in three), and where 66 wells produced above 20 thousand bopd, in November 2019 (ANP, 2019).
In a world that continues to demand more than 100 million barrels of oil per day, and where the discoveries will need to be focused on world class accumulations, in order to remain economically viable, attention and investments must certainly turn to Brazil.
The oil industry was already realizing this (Bloomberg Businessweek, 2019). Brazil is well positioned to capture a large part of investments in exploration and production in the coming years. It is enough that the government does not remove this positive perspective with measures that generate insecurity regarding energy and oil policies.
By understanding how low oil discoveries are at a global level, in relation to annual oil consumption, the situation may seem somewhat worrying to the world. However, the history of production and discoveries shows that the arrival of the energy transition, leaving hydrocarbons and going to alternative energies, moves forward, slowly but steadily. This will allow new energy sources to emerge, be developed and take over the space in the energy matrix that hydrocarbons will lose.
And all of this is very good for Brazil, not only because of its renewable energy potential, which will expand its participation in the global energy matrix, but also because Brazil hosts oil plays that represent the biggest and most attractive opportunities of the remaining years of the era of oil.
References
ANP, 2019. Oil and Natural Gas Production Bulletin. 31 Dec 2019. Available at http://www.anp.gov.br/arquivos/publicacoes/boletins-anp/producao/2019-11-boletim.pdf.
BP, 2020. Statistical Review of World Energy – all data, 1965-2018. Available at https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/xlsx/energy-economics/statistical-review/bp-stats-review-2019-all-data. xlsx.
Bloomberg Businessweek, 2019. Exxon Is Back in Brazil — and Betting Big on Deepwater Oil. Online 20 sep 2019. Available at https://www.bloomberg.com/news/articles/2019-09-20/why-exxon-is-returning-to-brazil?srnd=businessweek-v2.
Financial Times, 2017. Oil and gas discoveries dry up to lowest total for 60 years. Online 12 Feb 2017. Available at https://www.ft.com/content/441d0184-f13f-11e6-8758-6876151821a6.
Rystad Energy, 2020. Global Oil and Gas Discoveries Reach Four-Year High in 2019, Boosted by Exxonmobil’s Guyana Success. Online 10 Jan 2020. Available at https://www.rystadenergy.com/newsevents/news/press-releases/global-oil-and-gas-discoveries-reach-four-year-high-in-2019/.
The Oil Drum, 2008. Peak Oil Overview – March 2008. Online 25 May 2008. Available at http://theoildrum.com/node/4041.
About the author: Cleveland M. Jones, DSc is a professor and associate consultant at CEGeo; researcher at INOG – National Institute of Oil and Gas / CNPq; member of the Geosciences Advisory Board – NXT Energy Solutions; president of the Brazilian Environmental Academy of Letters – ABAL; president of IPGPar – Instituto Pró Gestão Participativa
Facebook: http://www.facebook.com/clevelandmjones; LinkedIn: http://www.linkedin.com/in/clevelandmjones; Lattes: http://lattes.cnpq.br/2858652663353677
Chico Mendes Award, Petrópolis City Council, 2019
Source: TN Petroleo
Leave a Reply