Daily Management Review

Rystad Energy Analyses Predicts Need For Hundreds Of New Oilfields In Contrast To The IEA


Rystad Energy Analyses Predicts Need For Hundreds Of New Oilfields In Contrast To The IEA
According to the Oslo-based consultancy Rystad Energy, even if global demand for oil drops sharply towards the middle of the century, companies will need to dig up thousands of new oil wells and hundreds of new oilfields in order to meet global demand.
This analysis by the organization is in stark contrast to the findings of the International Energy Agency (IEA) as it said last week no finding should be provided by investors for any new oil, gas and coal projects if net-zero emissions by mid-century is to be reached by the world.
Rystad sees oil demand falling to 36 million bpd by 2050 while the estimation of the IEA is that the demand for oil globally will decline to 24 million barrels per day (bpd) by the same time.
"Given that output from oil wells declines by an average of more than 20% per year, the international oil industry will still need to drill thousands of new wells in existing fields, as well as developing around 900 new oilfields with collective resources of about 150 billion barrels of oil," the consultancy said in a note.
It added that the majority of these projects will be related top redevelopment, extensions or tie-backs for existing platforms which meant that the investment requirements will be moderate since there will be reuse of existing infrastructure.
By 2030, investments for development for delivering about 10 million bpd will be needed, Rystad said, as it expected to witness a much slower fall in demand for oil globally compared to what is expected by the IEA. The consultancy said that the estimate of IEA had actually overestimated the impact of the growth of biofuel and changes in consumers’ behaviour.
Rystad added that ti would be possible to achieve the target of limiting the temperature rise to 1.5 degrees Celsius compared to pre-industrial times even if the demand for oil and gas stays at 36 million bpd in 2050.
It is likely that the analysis by Rystad will be welcomed by major oil companies as well as large oil producing countries such as Norway. They have previously questioned the analysis and conclusions about the issue arrived at by the IEA because they say that the analysis undermined the case for the industry to carry on producing oil in the medium term.
A shortage of investments in new projects could result in more volatile prices, the Organization of the Petroleum Exporting Countries (OPEC) has said.