22 controlled source electromagnetic resonance
➠
layperson. International Field and Well Data database on well count,
IHS CERA believes that this inflection point will herald success rate, and discovery sizes for each country, which
the beginning of an undulating plateau of supply that will has improved the YTF analysis.
last for perhaps two decades before a long, slow decline In this activity-based model we take account of project
sets in. It represents a transition period when traditional efficiency, costs, timing, hardware availability, and our
market forces and government policy will be unable detailed oil price outlook. We adopt a holistic portfolio
to adjust supply to meet growing demand and limits perspective to evaluate global productive capacity.
are reached. Of course the path of demand will exert a Although it is clear that some giant fields such as
controlling influence on the future supply curve. Peak Mexico’s Canterell are now strongly in decline following
demand is an equally important concept that may well be a successful secondary production program, and many
viewed in hindsight, from the perspective of a half century countries are past their 'peak', the sum of the parts as we
from now, as the main driver of peak supply. currently see them show that global productive capacity
But one further important point: Though a peak of should be able to grow for at least the next two decades.
global oil production is not imminent, there are major The long and complex debate about the future of
hurdles above ground to negotiate. global oil supply is characterised by two overriding
Productive capacity is defined as the maximum characteristics: the very large range of potential outcomes
sustainable level at which liquids can be produced projected and sustained disagreement about 'the answer'.
and delivered to market. Productive capacity estimates Production volumes are closely related to reserves,
account for routine maintenance, but not for general rock physics, and investment. Publicly available data
operational inefficiency, temporary interruptions such tend to be limited and of variable quality. A wide range
as weather or labor strikes, nor for dramatic swings of methodologies have been applied to the problem, from
in political and economic factors. For example, a field those encompassing systematic analysis and careful
may have a productive capacity of 140 000 barrels per assumptions to less robust techniques such as Hubbert’s
day (bd) but in reality produce 130 000 bd on average method, which can provide a good approximation in
over a year because of unforeseen maintenance issues, certain circumstances but fall down especially where
regulatory inspections, rig movements, and tie-ins. government policy constrains production. Importantly,
Hubbert’s approach, developed in the 1950s when
Reliable data
technology was stagnating, also fails to account for
At the core of IHS CERA’s methodology is recent fluctuations in demand, technology advances, and
production history, which is considered the most reliable the discovery of new hydrocarbon plays. Additionally
data available on which to base a supply projection. different studies are based on variable views on
We can measure the barrels arriving at the surface over reserves/resources, field production performance, future
time. Future production trends are extrapolated using a exploration, technology, and commercial issues. Few
comprehensive framework of decline rates and knowledge have attempted to incorporate the impact of aboveground
of operational plans for individual projects and fields. factors such as demand and geopolitics.
Remaining reserve data are an important constraint on Some models are based on a very pessimistic view of
the future supply profiles but—given the uncertainties the future, which is not borne out by scrutiny of recent
in reserves estimation—can be used only as a broad trends in exploration and production. For example,
guideline of future supply. frequent claims—that 'half of global oil reserves have
Four key components of supply are included in been produced', 'global reserves are not being replaced
the outlook: fields in production (FIP); fields under on an annual basis', and 'deepwater exploration is
development (FUD); fields under appraisal (FUA); essentially exhausted' – are questionable. The recent
yet-to-find (YTF) resources. discoveries of 10 giant oil fields below a thick salt layer
IHS CERA has fully incorporated the data from the in the Santos Basin, Brazil, may have boosted global
IHS International Field and Well Data database so that resources by at least 25billion barrels. Further assertions
there are approximately 24 000 fields and discoveries that giant oil fields are past their prime simply are not
underpinning the outlook. In addition, we have conducted borne out in a recent detailed study of 548 giant oil fields
detailed analysis of field production characteristics, in the IHS CERA Private Report Giant Fields: Providing the
especially decline rates, which have been incorporated at Foundation for Oil Supply Now and in the Future? This study
the field and project levels. demonstrates these fields’ continuing strong contribution
A detailed database of approximately 450 OPEC to global supply and that some 76 giant fields,
and non-OPEC FUD provides a clear insight into the representing 84 billion barrels, remain undeveloped. l
immediate plans of the industry to execute new projects
ranging individually up to 1.2mbd at production plateau. Peter Jackson, Senior Director, IHS Cambridge Energy Research
YTF resources are estimated by extrapolating historical Associates, Cambridge, Mass, USA. www.cera.com. IHS CERA
activity and success rate data and making assumptions delivers strategic knowledge and independent analysis on
about future levels of activity in key countries. We have energy markets, geopolitics, industry trends, and strategy. The
recently compiled historical exploration data from the IHS complete report is available for download.
www.engineerlive.com
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