Oil and gas fields declining faster than ever – IEA

Femi Fabunmi 

International Energy Agency (IEA) has sounded the alarm over rapidly accelerating decline rates in global oil and gas fields, cautioning that without sustained investment, markets could face severe supply shortages with knock-on effects for energy security and emissions.
According to the IEA’s latest report,

The Implications of Oil and Gas Field Decline Rates, output from existing oil and gas fields is falling faster than ever before, largely because of the growing reliance on shale and deepwater resources.

The agency warns that companies now must invest heavily each year just to sustain current levels of production.

“Decline rates are the elephant in the room for any discussion of investment needs in oil and gas,” said IEA Executive Director Fatih Birol. “Our new analysis shows that they have accelerated in recent years.

In oil alone, an absence of upstream investment would strip the market each year of the equivalent of Brazil and Norway’s combined production. The industry has to run much faster just to stand still.”

The report reveals stark contrasts across field types and regions. Giant onshore fields in the Middle East lose less than 2% of output annually, while smaller offshore European fields average more than 15% decline each year.

Shale and tight oil fields decline even more steeply: without ongoing drilling and investment, production can fall by over 35% in the first year and another 15% in the second.
The scale of the challenge is growing.

In 2010, a halt in upstream investment would have cut oil supply by just under 4 million barrels per day (mb/d) annually. Today that figure has jumped to 5.5 mb/d. For natural gas, annual decline volumes have climbed from 180 billion cubic metres (bcm) to 270 bcm.

To maintain today’s production levels through 2050, even with continued investment in existing fields, the IEA estimates the world would still need to bring online more than **45 mb/d of new oil capacity