The collapse in oil prices could end up cutting the growth in future oil supply in half from what would have been anticipated during the high price period, according to a new study from Cambridge Energy Research Associates (CERA), an IHS Inc. (NYSE: IHS) company. The Long Aftershock concludes that about 7.6 million barrels per day (mbd) out of total potential future net growth of 14.5 mbd from 2009 to 2014 are “at risk.”
“The inventory of potential new oilfield developments, including fields that could be developed and brought online during the next five years, remains adequate to meet likely demand in the medium to long term,” says CERA Senior Director Peter M. Jackson, an author of the report. “This, however, depends on sufficient and timely investment.”
The steep decline in oil prices has, so far, not been matched by an equal decline in the cost of developing new oil fields or in fiscal terms. This means the economics of a significant share of potential future oil supply growth have deteriorated to the point where it risks “being slowed down, postponed, or cancelled altogether. Slower growth in oil production capacity over the next five years could lead to the next period of rising oil prices, but much depends on the recovery of world oil demand – which CERA predicts could fall as much as 2.3 million barrels per day in 2008 and 2099 combined – and the reaction of the oil industry and government policies.
See full Press Release.
Posts
