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Decline rates are a critical factor influencing the oil market and price recovery. Investment cuts at producing fields and a reduced pipeline of new projects since the price crash should have caused non-OPEC decline rates to increase. From historical lows in 2014, decline rates jumped to 5% in 2015. But our analysis suggests they will stay at this level until 2020. In the short term, operators have implemented self-help measures aimed at maximising cash flow. Longer term, projects launched during the period of high investment will mitigate declines over the 2018 to 2020 period. But these drivers will wane beyond 2020 as the effects of the lack of investment are felt. Higher prices will be needed to stimulate investment in new conventional production. We analyse the potential effect on a widening supply gap from different decline rate trends. Stable decline rates are a disappointing story for those looking for significant price support coming from declining conventional production.
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This report includes 2 file(s)
Non-OPEC decline rates: lower for longer PDF - 478.44 KB 12 Pages, 0 Tables, 15 Figures
Regional Appendix.pdf PDF - 725.28 KB
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This Upstream Oil and Gas Insight report highlights the key issues surrounding this topic, and draws out the key implications for those involved.
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Insight | Aug 2017
Non-OPEC decline rates: lower for longer
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