- Oil discoveries in 2017 were the lowest since the 1940s, according to oil-and-gas consultancy Rystad Energy.
- Discoveries have fallen every year since 2014 along with company budgets for exploration.
- We could face a shortage in as soon as 10 years, Rystad Energy estimates.
We’re running out of new oil.
Explorers in 2017 discovered the least amount of oil since at least the 1940s, according to Rystad Energy, an oil and gas consultancy.
It estimated that less than seven billion barrels of oil equivalent were found this year through Thursday. Some energy companies will announce more discoveries next year in their 2017 annual reports, but Rystad expects this to increase the 2017 total by 10% at most.
New discoveries have fallen every year since 2014, when oversupply triggered an oil crash that cut its price by more than half. The plunge forced many upstream oil producers to reduce their spending, and helps explain why discoveries are also down.
But that’s not the only reason: explorers are finding less oil resources per field, according to Rystad. An average offshore discovery held about 100 million barrels of oil equivalent (boe) in 2017, down from 150 million boe in 2012.
The last time oil and gas companies added to their reserves by as much as they were producing was in 2006, when the so-called reserve replacement ratio reached 100%. It was down to 50% in 2012, and 11% in 2017.
This doesn’t mean we’re about to run out of crude oil. Major producers including the US have emergency reserves. Moreover, the industry’s headache for the past few years has been too much oil. The Organisation of Petroleum Exporting Countries, a cartel of big producers, has agreed to deal with the oversupply problem by cutting output until the end of 2018.
Also, there are usually a few years in between when an oil firm makes a large discovery and when it’s ready for production. That means we can count on recent discoveries to keep our engines running for some time.
And there were some major discoveries this year, like the 1 billion barrels found off the coast of Mexico by Premier Oil, Talos Energy, and Sierra Oil & Gas.
But if oil discoveries continue trending down, we could be talking seriously about oil shortages in about a decade from now, Rystad estimates.
“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,” said Sonia Mladá Passos, a senior analyst at Rystad, in a press release.
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