Impact of exploration on global oil supply Report

Insight 15 April 2016

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Report summary

A second year of low oil prices has put further pressure on the upstream sector and exploration budgets have been slashed. Before the oil price crash the volume of conventional liquids being discovered was on a downward trend and this, combined with lower exploration budgets, will have a significant impact on long term supply. We have conducted a comprehensive study of the impact of exploration on global oil supply by mining Wood Mackenzie’s database and analysing all conventional fields discovered since 2000. We have also assessed the potential effect the recent downward trend in discoveries will have on long term supply.

Exploration in the last four years has been disappointing and gas prone
The price downturn has caused large reductions in exploration spend
Healthy discoveries during the 2000s with longer lead times mean that there is a strong potential for medium term developments. But tough project economics have led to many being deferred
These are also important for the longer term but unless exploration results improve continued supply growth will become unsustainable
There could be a 4.5 million b/d shortfall by 2035 if the recent downward trend in exploration results continues