The International Energy Agency’s (IEA) most recent estimate of 2017 global oil consumption is 97.7 million barrels a day, or about 37.8 billion barrels for the year. Adding in consumption of natural gas and other liquids, total hydrocarbon consumption for the year will be around 65 billion barrels of oil equivalent.
New discoveries of conventional oil & gas resources in 2017 totaled just 6.7 billion barrels of oil equivalent. The discovery total does not include unconventional resources including shale oil and gas plays in the United States.
According to researchers at Rystad Energy, discovered volumes in 2017 total just 555 million barrels of oil equivalent a day, 90 million fewer than were discovered in 2016, and more than 1.9 billion fewer than were discovered in 2012.
According to Rystad Energy senior analyst Sonia Mladá Passos, the decline is unprecedented:
We haven’t seen anything like this since the 1940s. The discovered volumes averaged at ~550 million barrels of oil equivalent per month. The most worrisome is the fact that the reserve replacement ratio in the current year reached only 11% (for oil and gas combined) — compared to over 50% in 2012.
Low resources per discovered field can influence its commerciality. Under our current base case price scenario, we estimate that over 1 billion [barrels of oil equivalent] discovered during 2017 might never be developed.
According to Rystad data, 2006 was the last year when the reserve replacement ratio reached 100% largely due to the discovery of a giant onshore gas field in Turkmenistan. The reserve replacement ratio measures the amount of discovered resources during the year relative to the amount of production of hydrocarbons in the same year globally.
Not only did the total volume of discovered resources decrease – so did the resources per discovered field. An average offshore discovery in 2017 held ~100 million barrels of oil equivalent, compared to 150 million boe in 2012.
While there have been some notable successes this year, we have to face the fact that the low discovered volumes on global level represent a serious threat to the supply levels some ten years down the road. Global exploration expenditures have decreased year-over-year for three consecutive years now, falling by over 60% from 2014 to 2017. We need to see a turnaround in this trend if a significant supply deficit is to be avoided in the future.