Every last drop Using AI-powered analysis to find oil-field upside potential

Upward revisions at producing fields, particularly giants, have been the mainstay of reserves replacement and growth for decades. ‘Big fields get bigger’ is an oft-repeated industry truism. First, appraisal work can boost estimates of in-place oil resource. Second, the proportion of in-place oil expected to be produced (recovery factor) tends to increase over time.

Of the two, better oil recovery factors tend to be by far the more important source of reserve revisions. This is where the industry should focus if it is to meet long-term oil demand.

As recovery factors creep higher, operators face diminishing returns on investments such as infill drilling and secondary or tertiary recovery technologies. Such gains cannot continue forever. Each increment of growth becomes harder and harder to achieve.

Timing is an issue, too. Long late-life production over many decades can nudge recovery factors very high and be handy in delaying abandonment costs. However, most such supply adds minimal value and hardly addresses the industry’s major challenges.

What would the upside be if every oil field achieved best-practice recovery?

The world’s conventional oil fields, outside the US Lower 48 and oil sands, hold over 8 trillion barrels of oil in place, with an average recovery factor of 29%. Of this, 15% has already been produced and 14% remains.

We use AI to identify the 100 most similar analogues for every oil field larger than 50 million barrels to understand each field’s recovery factor in context. For each field, we analyse whether its recovery factor is better or worse than its cohort of similar assets across the industry. We are most interested in the potential upside that exists if performance can be improved.

The result of this analysis is a new proprietary dataset of four different reserve scenarios for more than 2,500 conventional oil fields, including:

• Most likely reserves based on current investment plans.
• Reserves based on an average recovery factor compared with analogues (P50 or median value within the dataset).
• Upside reserves based on a top-quartile recovery factor compared with analogues (P75 or 75th percentile within the dataset).
• Upside reserves based on a best-in-class recovery factor compared with analogues (P90 or 90th percentile within the dataset).

The global sum of these recovery upsides reveals how much extra oil can realistically be recovered without recourse to development approaches not already happening somewhere.

If every field were to achieve top-quartile performance, this would boost average recovery factor to 34%, adding 470 billion barrels of reserves. Best-in-class performance would increase the average recovery factor to 41% and add more than 1,000 billion barrels.

These enormous volumes are not pie-in-the-sky figures based on unproven technologies. Such upside is already being achieved using technologies available today. Much is likely to be economically viable at current oil prices.

Where is this upside?

Recovery upside varies by basin and resource theme. This opportunity lies almost exclusively within onshore and shallow offshore fields, which account for 63% and 31% of the best-in-class upside, respectively. The industry must sharpen its focus here if it is to meet long-term demand.

By contrast, deepwater and ultra-deepwater fields barely register, together holding less than 6% of best-in-class upside. Such assets are typically operated by well-funded companies with excellent access to technology. The high fixed operating costs in deepwater create an urgency to recover reserves before production dips below a field’s economic threshold. Deepwater reservoirs are often of excellent quality, quickly achieving most of their potential, leaving little headroom left to exploit.

This variation by resource theme means that field-recovery upside is unevenly distributed between countries. Iran, Venezuela, Iraq, and Russia stand out with the largest top-quartile reserves upside of any countries. By contrast, Saudi Arabia, Kuwait and the United Arab Emirates are already on track to achieve high recovery factors close to 50%, leaving these countries with far less upside.

Who operates this upside?

Almost two-thirds of the potential additional recovery sits with the NOCs and other state-controlled enterprises. They operate fields with more than 320 billion barrels of upside on a top-quartile basis and 700 billion barrels of upside on a best-in-class basis.

The fields themselves are not unusual. NOC-operated fields generally have similar potential to other fields, with scope to achieve average recovery factors of 39% on a best-in-class basis, almost matching the industry overall best-in-class potential of 42%. At present, the NOCs are on track to achieve a slightly lower recovery factor of 28% compared with the industry average of 29%.

The Majors operate conventional oil fields of above-average quality, on track to achieve an average recovery factor of 33%. On a best-in-class basis, these fields have scope to reach 47% recovery, 6% better than the global best-in-class average.

The downside of this stronger performance is that the remaining upside is less. The Majors operate 32 billion to 58 billion barrels of upside on a top-quartile to best-in-class basis, corresponding to just 5% of global potential.