The oil industry is not able to find enough liquids on a global basis to replace what is being produced.
The good news is that a potentially supergiant discovery (i.e. > 5 Bbo recoverable) has been made on Alaska’s North Slope. With an estimated 6-10 Bbo in place, Smith Bay possibly ranks as the world’s largest oil find in recent years. In comparison, Prudhoe Bay, discovered in 1967 and the largest oil field ever found in the US, originally contained some 25 Bbo, of which close to 65% has been recovered. The largest field in the North Sea – Statfjord – just passed the production milestone of 5 Bboe.
The bad news is that, by the close of 2017, Smith Bay was the only decent discovery on a global basis. Following nine months of exploration, only 5 Bboe (i.e. both oil and gas) had been found. And most of this is gas, according to Rystad Energy.
This comes on top of two other bad years, 2014 and 2015, when only 15 and 12 Bboe respectively were discovered. Moreover, in 2015 only 35% of that was oil. This trend seems to continue into 2016. Oil may not be plentiful any more.
Global conventional discoveries. (Source: Rystad Energy)
By comparison, the consumption of oil (only) was approximately 33 Bbo in 2015, according to the BP Statistical Review of World Energy. In other words, for many years in a row we have found a lot less than we produce and consume. This is called the replacement ratio, and it does not take much to understand that we cannot continue with a ratio much lower than one if we want to avoid a deficit in the long run. That is, of course, good news for those who enjoy high oil prices, like the oil companies.
We certainly need more discoveries with reserves calculated in billions of barrels, like Smith Bay. The big question is where to look – and who will do the looking? In Alaska, all that was needed was a largely unknown privately held independent exploration and production company formed in 2011.
