Edinburgh/London/Houston/Singapore - Through operational excellence programmes and smart spending, operators have managed to maximise production and improve efficiencies, bucking expectations of an increase in decline rates. In fact, non-OPEC decline rates have remained stable since 2015. A new report by Wood Mackenzie, Non-OPEC Decline Rates: Lower for Longer, looks at the factors influencing this stability, how long it can be maintained and the impact future shifting decline rates may have on the oil market.
Dr Patrick Gibson, Research Director, Global Oil Supply, at Wood Mackenzie, said: “Decline rates are a critical factor influencing the current rebalancing of the oil market and price recovery. A 50% cut in investment in non-OPEC producing oil fields and a dwindling pipeline of new projects since the price crash should have led to progressively steeper decline rates. Nonetheless, decline rates have held steady at around 5% since 2015 and we expect they will remain at this level until 2020.”
Wood Mackenzie's analysis shows that, annual decline rates for conventional fields peaked at nearly 7% during the last decade, or 2.4 million barrels per day (b/d) a year. However in 2014, they reached an historical low of just 3.6%, or 1.2 million b/d. The price collapse saw decline rates increase to 5.1%, or 1.9 million b/d in 2015, on the back of steep spending cuts. Decline rates have stayed at around that level since.