Falling exploration-and production investment is causing falling production in multiple countries. Meanwhile, as Paal Kibsgaard, Schlumberger’s CEO cryptically observes, “production challenges” are emerging in the US shale.
In March the leaders of OPEC and the International Energy Agency (IEA) jointly warned that lack in upstream oil and gas spending could result in a future energy crisis. The oil industry has yet to recover from the steep and unprecedented two-year drop in investment in 2015-2016, they said. Moreover, the IEA sees little-to-no increase in upstream spending outside of the U.S. in 2018. And as Fatih Birol, the agency’s executive director, puts it: “We lose each year one North Sea” or about 3 million barrels per day (MMbbl/d) from declining oil fields.” Meanwhile there is no sign of demand falling just yet, as BP’s diagram above shows, and the oil companies do not expect any such drop for decades to come.
Image: from BP Statistical Review of World Energy 2017