The average rate at which oil and gas fields’ output declines over time has significantly accelerated globally, largely owing to higher reliance on shale and deep offshore resources. This means companies must work much harder than before just to maintain production at today’s levels, according to a new report from the International Energy Agency.
The international assessment of the future of oil and gas often focuses on demand trends, while the factors affecting supply receive considerably less attention. The new report, The Implications of Oil and Gas Field Decline Rates, seeks to rebalance this debate, drawing on previous groundbreaking IEA analysis on decline rates and exploring what has changed. This new analysis is based on production data from around 15 000 oil and gas fields around the world.
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The report highlights that only a small part of upstream oil and gas investment is aimed at meeting increases in demand – while nearly 90% of upstream investment annually is dedicated to offsetting losses of supply at existing fields. The IEA’s executive director Fatih Birol described decline rates as “the elephant in the room for any discussion of investment needs in oil and gas”.
In the case of oil, an absence of upstream investment would remove the equivalent of Brazil and Norway’s combined production each year from the global market balance. The situation means that the industry has to run much faster just to stand still. And careful attention needs to be paid to the potential consequences for market balances, energy security and emissions.
