Are Oil Discoveries Becoming Less Common?

Oil is one of the most common sources of fuel. Along with coal and natural gas, it’s one of the three fossil fuels. Since the 18^th century Industrial Revolution, these three sources of fuel have powered the majority of the world. But, as with the other fossil fuels, it’s not renewable. It won’t last forever. Recent data seems to suggest, in fact, that the end might be getting closer for oil. Read on for the interesting trends and what it means for the energy industry.

70-year low

According to data and analytics specialists Wood Mackenzie, recent oil discoveries have been a drop in the ocean compared to previous decades. The 1940s peak of over 150,000 billion barrels is hardly an accurate figure to go off, but the 1950s, 60s and 70s often saw annual hauls of nearly 100,000 billion barrels.

Since then, a steady decline in discoveries has led to an astoundingly low 2015 figure of just 2.7 billion barrels. The 2015 total represents an almost 70-year low, with 1947’s post-war tally of 230 million standing at the bottom, before the huge Ghawar discovery in 1948. It’s looking like 2016 will be even lower too, with just 736 million barrels before August.

Rising demand

What’s particularly worrying about this is that demand is not falling in the same way as the supply. Quite the opposite in fact. Countries and their economies are still largely reliant on the conventional fuel sources. The US Energy Information Administration has estimated that the global demand for oil will actually grow over the next decade. The current requirement for around 95 million barrels a day is predicted to increase to over 105 million barrels by 2026.

So why the fall in discoveries? It’s thought that the decreasing number is a direct result of a cut in funding. Global spending on drilling and studies has dropped by over half since 2014. The real impact will be felt in around ten years. Less explorations eventually leads to a lack of resources for production. This consequence, which will begin to take effect in the next decade, has “a significant potential to push up oil prices,” suggests Nils-Henrik Bjurstroem, of Rystad Energy AS.

Self-sufficiency

Economically, explorations in energy can be huge for a country. The United States, for instance, has become self-sufficient for natural gas and is approaching a similar state for oil. One complication in their case is the transport of the oil. As the oil production increased vastly, the transportation infrastructure didn’t so much. The result? Crude oil is now being transported by trains. Read more about this issue in ‘Proliferation of Crude by Rail and its Impacts’.