As the oil price fell to $30 in 2016, oil companies cut their exploration and capital expenditures by 25-40%. For example, ExxonMobil, the largest oil company in the United States, cut their capital expenditures by 26% in 2016, from $26 billion in 2015 to $16 billion last year. This had a profound impact on new oil discoveries.
According to the IEA report:
Oil discoveries declined to 2.4 billion barrels in 2016, compared with an average of 9 billion barrels per year over the past 15 years. Meanwhile, the volume of conventional resources sanctioned for development last year fell to 4.7 billion barrels, 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.
By taking the IEA’s oil discovery data and comparing it to the total amount of conventional oil consumed by the world in 2016, here is the following chart:
The world consumed 69 million barrels per day of conventional oil last year, which equaled a total of 25 billion barrels (source: IEA report above). Which means, conventional global oil discoveries of 2.4 billion barrels were less than 10% of total world conventional oil consumption. This is extremely bad news.
To understand the breakdown in the different oil types, the IEA provided the following data:
Conventional oil production of 69
Global Conventional oil production was 69 million barrels per day (mbd) of the total 85
Now, what is even more alarming, is that global oil discoveries have been much lower than production for quite some time. The IEA also stated that the amount of world conventional oil discoveries averaged about 9 billion barrels for the past 15 years. If we assume that the world was producing 65
Here are the oil figures:
9 billion average annual barrels oil
So, not only did the world only discover 10% of the conventional oil it consumed last year, it
I will be writing more energy articles showing how the situation is becoming more dire for the U.S.
For example, ExxonMobil cut its capital expenditures another 19% during Q1 2017 versus the same period last year. Falling exploration and capital expenditures will grind to a halt future oil
- Source, SRSRocco