“The global market may collapse because of high transport costs and global recession,” said the influential geologist Colin Campbell in a speech in Germany in 2000, a time when fears of imminent oil scarcity were rising. “Self-sufficiency will become a priority.”
And yet companies have continued to find more and more oil and gas lying in the ground. That trend continued in 2019, a banner year for hydrocarbon discoveries. According to Rystad Energy, oil and gas firms discovered a four-year high 12.2 billion barrels of oil or the equivalent last year, with new discoveries in Guyana alone totaling some 1.8 billion barrels.
Off the coast of the north African nation of Mauritania, BP discovered the Orca gas field, which holds about 1.3 billion barrels, Rystad estimated earlier this week. There are now enough gas resources in the region to justify plans for a new liquefied natural gas (LNG) hub in the Bir Allah area of Mauritania.
Meanwhile a pair of discoveries in the Kara Sea totaling some 1.5 billion barrels by state-run firm Gazprom added to Russia’s haul. Other large discoveries of oil or gas around the world included French firm Total’s Brulpadda in South Africa, ExxonMobil’s Glaucus in Cyprus, and Chinese firm CNOOC’s Glengorm in the U.K., Rystad said.
Firms will be looking even harder for new discoveries in 2020. After slumping from 2014 through 2016 as oil prices languished, global upstream capital expenditure rose modestly in 2019 and is projected to climb a further six percent per year through at least 2025, while exploration spending is expected to recover at a pace of 7 percent per year, according to forecasts from Rystad and accounting firm PricewaterhouseCooper. The recovery will be underpinned by exploration in North America thanks to the continent’s abundant supplies of shale oil and gas.
But the oil and gas sector’s ample discoveries in 2019 don’t mean that firms will be similarly rewarded in the future.
“It’s getting harder to find the large discoveries known as ‘elephants,’ and most prospective areas have already been explored,” PricewaterhouseCooper said in a briefing. Moreover, even as firms are projected to spend more, they still have a long way to go before they return to spending levels from before the 2014 price collapse. Capital spending fell more than 60% from 2014 to 2016.
50 years’ worth of oil, and looking for more
According to BP’s annual statistical review, in 2018 the world had proven oil reserves of 1.73 trillion barrels, enough to fill up 263,000 Empire State Buildings. If society keeps drawing from those reserves at the current production rate of around 100 million barrels per day, it would be enough to last about 50 years, the better part of most people’s lifetimes.
But according to the International Energy Agency (IEA), humanity could easily still be consuming oil at rates similar to today even as far into the future as 2040. The Paris-based agency expects global consumption to plateau somewhere above 1 million barrels per day in the 2030s as electric vehicles begin overtaking gasoline- and diesel-powered cars, and to decline only slightly thereafter through at least 2040. (Gasoline and diesel are derived from crude oil in oil refineries.) Projections out to 2070 are tough to come by, but if the IEA’s scenarios hint at what is to come, then by 2070, the year today’s current proved reserves run out, oil demand could still be prodigious.