Forty years ago, the conventional wisdom about oil was that we were running out of it and needed to find ways to conserve. Twenty years ago, it was faddish for people in the oil business to talk about the then-assumed fact that “all the elephants have been found,” with the word “elephant” referring to massive reserves of crude oil and/or natural gas. I cannot begin to count the number of times I heard that bit of conventional wisdom expressed by speakers at IPAA or API conferences during that period of time around the turn of the century.
As things have turned out, there were and are still elephants out there around the world, and the oil and gas industry keeps finding them. A new report from Rystad Energy finds that global oil and gas discoveries outside of the United States in fact reached a 4-year high during 2019, and the vast majority of them had nothing to do with shale or fracking.
According to the report, “The world’s oil and gas explorers powered ahead and discovered 12.2 billion barrels of oil equivalent (boe) in 2019, the highest volume since 2015, according to estimates from Rystad Energy. Last year recorded 26 discoveries of more than 100 million boe, with offshore regions dominating the list of new oil and gas deposits.”
By far the largest, in terms of discovered oil resource, of the offshore regions to which the report refers was the Stabroek block offshore Guyana, the small nation adjacent to Venezuela on the north-central coast of South America. There, a consortium comprised of ExxonMobil, Hess and CNOOC announced four major new discoveries during 2019. Tullow Oil also announced two major discoveries on its own acreage to the west of Stabroek during the year. All told, “Rystad Energy estimates that the discoveries in Guyana hold cumulative recoverable resources of around 1.8 billion boe.”
Of course, the 2019 numbers do not include last week’s announced major new discovery offshore Suriname – just to the East of Guyana – by Houston-based Apache Corp. and French giant T0tal. Obviously, this north-central South America region holds great promise for the future.
But this story is not just about crude oil – 2019 was also characterized by an array of new natural gas discoveries. The largest of those were drilled in Russia and Mauritania, both of which were home to over 1.3 billion boe in natural gas finds. Additional major natural gas resources were discovered in Iran, Cyprus, South Africa and Malaysia.
So, while the oil and natural gas booms in U.S. shale in general and the Permian and Marcellus Shale basins specifically tend to get the lion’s share of the energy-related news attention here in the United States, it’s important to know that another boom is taking place internationally, one that helps to ensure the world’s future energy security.
Meanwhile, back in the United States… – None of this is to discount the impacts of the Shale Revolution, which has radically shifted the global energy picture over the past decade. In fact, the Energy Information Administration (EIA) published a new report of its own Monday morning, documenting the record-setting levels of proved oil and natural gas reserves and production that came about in the U.S. during 2018, the most current year for which complete data is available.
The EIA finds that U.S. 2018 production of oil and lease condensate grew by a whopping 17% over 2017 levels, while natural gas volumes for 2018 were up by 12%. Reserve additions also grew dramatically during the year, with proved oil reserves surpassing the previous record set in 2017 by 12%, and reserves of natural gas rising by 9% year-over-year.
While the U.S. boom obviously did slow during 2019, it is important to note that represents just a slowing in the rate of increase, not an overall contraction. The EIA’s current data indicates that October 2019 U.S. oil production (the most recent month available) was 627,000 bopd higher than in December 2018. U.S. natural gas production, meanwhile, rose by more than 10% between December 2018 and October 2019.
So, bottom line, the world is in the midst of the one of the largest oil and natural gas booms of modern times. It is a boom that will continue to promote global prosperity and security for many years to come.