Yemisi Izuora
The Organization of Petroleum Exporting Countries, OPEC, will continue to remain a key crude oil supplier up to 2040, natural resource consultancy Wood Mackenzie has said, adding production from US Lower 48 – group of states which account a bulk of US oil production will likely reach a plateau in 2020s and total Non-OPEC liquids production will decline post 2030.
“As non-OPEC production growth slows and the importance of OPEC’s output increases from 2023, OPEC’s role in managing prices becomes more focused on ensuring upstream investment keeps up with replacing lost barrels from onstream declines, and the growth in oil demand over the next decade or so,” the consultancy said in its Macro Oils Long-Term Outlook H1 2018 report.
The report adds that the US Lower 48, will continue to enjoy growth through the medium-term, with its crude and condensate production reaching a plateau of over 11 million barrels per day in the mid to late-2020s. The report also highlights that crude oil production growth in US crude has been relentless, with activity picking up pace in the last 18 months, supported by rising crude oil prices and a continuation in intensity and pace of completions.
“While the pace of growth eases over the next five years, onshore Lower 48 crude oil production remains the key driver of global oil supply growth into the middle of next decade. Crude oil and lease condensate production grows from about 7 million barrel per day in 2017 to 11 million barrel per day in 2024, reaching a peak of 11.7 million barrel per day in the early-2030s,” the report stated.
US oil supply is forecast to dominated by the Permian Basin throughout the forecast period, with total conventional and unconventional production from the basin reaching 6.3 million barrels per day , or 56 per cent of total US Lower 48 crude, in 2035.
The report predicts an uptick in upstream investments which plummeted 50 per cent in the wake of oil price collapse. The consultancy firm said 32 projects received sanctions in 2017, resulting in Final Investment Destination (FID) for 6 billion barrels of liquid reserves, double the reserves sanctioned in 2016.
The report adds that investor appetite for deep-water projects has rebounded since 2015 and world-class green-field developments along with a diverse conventional project mix are now competing with US tight oil.
“This recovery in conventional projects will continue; at least 30 major project FIDs
are expected in 2018. So far this year, we have seen 15 projects sanctioned. Within the project pipeline, there is potential for up to a further 20 FIDs by the end of the year. This points to a swelling hopper of new commercial conventional developments, which will help bolster non-OPEC supply,” the report noted.
The report also states the global oil and gas industry has significantly increased the pace at which new projects are brought to peak production levels. The projects are now being forecast to reach peak production in five years from the date of FID as compared to nine years earlier.