The prospect of accelerating declines in production at individual oilfields is adding to uncertainties. The findings of an unprecedented field-by-field analysis of the historical production trends of 800 oilfields indicate that decline rates are likely to rise significantly in the long term, from an average of 6.7% today to 8.6% in 2030.
Despite all the attention that is given to demand growth, decline rates are actually a far more important determinant of investment needs. Even if oil demand was to remain flat to 2030, 45 mb/d of gross capacity – roughly four times the current capacity of Saudi Arabia – would need to be built by 2030 just to offset the effect of oilfield decline.
Bottom line. We would need to find an additional 60 million barrels per day of new oil supply in 20 years to meet global demand. It is highly unlikely that we will be able to find new supply of 60 million barrels per day in 20 years time. In light of these data the 60% decline in crude oil since June seems to offer attractive investment opportunities in selected stocks.
More, much more when you read older posts and subscribe to The Peter Dag Portfolio by going to https://www.peterdag.com/.
George Dagnino, PhD
Editor, The Peter Dag Portfolio
Since 1977
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