Oil Companies Keep Exploring

Oil Companies Keep Exploring

With the EU clamoring for the end of fossil fuels, one wonders why the search continues for new oil discoveries.

Here is the latest report on how the search for oil is progressing this year.

(Rystad Energy is an energy consulting services and business intelligence data firm.)

So far in 2019, 7.7 billion barrels of oil equivalent (boe) have been discovered, compared with last year’s 10 Billion boe. While this is the lowest replacement ratio in recent years, it’s only for conventional sources. 

Unconventional shale oil has expanded rapidly during this period, so the ratio of conventional discoveries may be less important than in the past.

Rysted also reported that, “Offshore drilling activity has been on a steady rise in recent years, with 23 new exploration wells expected in 2019. Only seven offshore wells were drilled in 2013.” 

Offshore Oil magazine reported that rig utilization has climbed to 62%, the highest in three years.

Drilling offshore wells is an extremely expensive proposition. A single exploratory well can cost $100 million. The field then requires development wells that can cost over a billion dollars before any production begins.

The oil from these wells won’t be available for a decade or more, so the investment is a longterm bet on oil.

Why are these companies spending billions to find new oil and gas wells when the media says oil and natural gas will be left stranded as policies to prohibit the use of oil and natural gas are being implemented?

Companies like BP and Shell are investing in other businesses, such as electric power, but these investments are relatively small when compared with the investment in new oil fields.

Countries are actively promoting the development of oil in their territorial waters. Uruguay, for example, has opened an area off its coast for oil exploration.

From Offshore Magazine October 2019
  • Lebanon is offering more offshore blocks for drilling.
  • Guyana has seen huge discoveries since 2015.
  • Offshore Norway remains a very active drilling area. 
  • Shell is investing in the Gulf of Mexico.
  • BP won an offshore oil block in Brazil, with $75 million bid.
  • Total, French Company, led a consortium that won exploration and production rights for offshore block near Brazil’s pre-salt region, paying $978 Million.
  • ENI, an Italian firm, is drilling in Nigerian waters.
  • CNOOC is active in the North Sea.

Why is there so much exploration activity when the media is claiming that fossil fuels will no longer be used by 2040? 

BP, Shell and Total are based in Europe, and the EU is pressing these companies to recast their companies in something other than oil. 

ExxonMobil has been sued by state governments and is also under political pressure to abandon oil and natural gas.

Why is China actively exploring for oil and natural gas?

Is it possible these oil companies are wary of the hysteria surrounding climate change, supposedly caused by CO2 emissions from the use of fossil fuels?

It would appear that these oil companies are investing billions of dollars in the belief that there will be a growing need for oil for decades to come.

Would they be investing billions in the future of oil and gas if they were convinced CO2 emissions caused climate change?

. . .

 

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