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12 Pages

Non-OPEC decline rates: lower for longer


Non-OPEC decline rates: lower for longer

Report summary

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.

What's included?

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

Description

This Upstream Oil and Gas Insight report highlights the key issues surrounding this topic, and draws out the key implications for those involved.

This report helps participants, suppliers and advisors understand trends, risks and issues within the upstream oil and gas industry. It gives you an expert point of view to support informed decision making.

Wood Mackenzie's 500 dedicated analysts are located in the markets they cover. They produce forward-looking analysis at both country and asset level across the globe, backed by our robust proprietary database of trusted research.

Proprietary data means a superior level of analysis that is simply not available anywhere else. Wood Mackenzie is the recognised gold standard in upstream commercial data and analysis.

  • Executive summary
  • Introduction
    • After reaching record highs, investment in producing fields has now halved
  • Why global declines will remain stable until 2020
    • Two short-term factors have stabilised declines at 5%
    • Longer-term factors will hold decline rates below historical norms
    • Differences in regional decline rate trends reflect the wide range of drivers at play
    • Onshore declines are far less severe
    • Without increasing investment, non-OPEC declines will accelerate after 2020
  • Changing global decline rates: potential impact on the oil market
  • Conclusion
  • Appendix
    • Methodology
    • OPEC decline rates

In this report there are 15 tables or charts, including:

  • Executive summary
  • Introduction
    • Non-OPEC capex on producing oil fields (excluding North America tight oil) and Brent oil price
  • Why global declines will remain stable until 2020
    • Annual average non-OPEC decline rate (excluding North America tight oil)
    • Canada oil sands production profile
    • Oil sands effect on the global decline rate
    • Proportion of production by asset vintage
    • Asset vintage decline rates
    • Production from European projects onstream since 2011
    • Effect on European decline rates
    • Average non-OPEC decline rates: the biggest producing regions have the lowest declines
    • Proportion of production by resource theme
    • Resource theme decline rates
  • Changing global decline rates: potential impact on the oil market
    • Supply gap by 2021, minus 1% change in non-OPEC declines...
    • ...And plus 1% increase in declines
    • New sources of supply that close the 2021 supply gap under our base case forecast
  • Conclusion
  • Appendix
    • Annual average OPEC decline rates
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