According to Oil and Gas Journal Editors, the global conventional oil discoveries fell to a record low in 2016 as companies continued to cut spending. Also, the number of conventional resources sanctioned for development last year reached their lowest level in more than 70 years, according to the International Energy Agency
IEA warned that both trends could continue this year.
Conventional oil discoveries declined to 2.4 billion bbl in 2016 from an average of 9 billion bbl/year over the past 15 years. Meanwhile, the volume of conventional resources sanctioned for development last year fell to 4.7 billion bbl, 30% lower than the previous year as the number of projects that received a final investment decision dropped to the lowest level since the 1940s.
“This sharp slowdown in activity in the conventional oil sector was the result of reduced investment spending driven by low oil prices. It brings an additional cause of concern for global energy security at a time of heightened geopolitical risks in some major producer countries, such as Venezuela,” IEA said.
In sharp contrast to the slump seen in conventional drilling, the US shale industry is surging. US shale investment rebounded sharply and output rose on the back of production costs being reduced by 50% since 2014.
“This growth in US shale production has become a fundamental factor in balancing low activity in the conventional oil industry,” IEA said.