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Global discoveries of new conventional oil and natural gas in 2017 totaled only 7 billion barrels of oil equivalence—a level last seen in the 1940s. (See chart below.) According to Rystad Energy, not only did the 2017 total volume of discovered resources decrease, but the resources per field also declined. In 2017, average offshore discoveries held 100 million barrels—down from 150 million barrels in 2012. The reserves replacement ratio reached just 11 percent for oil and natural gas in 2017—the eleventh straight year it was below 100 percent. The last time the reserve replacement ratio reached 100 percent was in 2006. Since 2014, exploration expenditures fell over 60 percent most likely due to low oil prices. Further, the world consumes 79 percent more hydrocarbons than it discovers. The Trump administration’s plan to open up most U.S. offshore areas to oil and gas drilling, however, could help boost investment in the sector by billions of dollars and open up access to billions of barrels of oil.
Low discovered volumes of oil can be an indicator of coming supply shortages and resulting price increases—10 years or more in the future. For this reason, the Trump administration is opening the majority of the U.S. Outer Continental Shelf (OCS) to leasing in the 2019 to 2024 time period with over 40 lease sales planned in the Department of the Interior’s proposal.
Rystad - Energy - US - Offshore - Sector
According to Rystad Energy, the U.S. offshore sector held approximately 180 billion barrels of oil-equivalent oil and gas combined, before the first offshore production took place. In the Gulf of Mexico, which is the world’s most mature offshore region, nearly 50 percent of these original resources have been translated into production since the 1960s. The remaining 50 percent, or 90 billion barrels of oil equivalent, have yet to be discovered in the OCS. Out of...
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