But they were less than a third of the volume of total oil consumption in 2019!

The world is still celebrating the modest increase in oil discoveries in 2019, after several years of discoveries significantly below those occurring up to 2015 (Rystad Energy, 2020). However, even in those prior years of higher discoveries, the world was still discovering much less new oil every year than the amounts that were being drawn down from the known world oil reserve base.

Since approximately 1984, the world does not discover as much oil as it produces, year by year. This is clear from a comparison between the world oil production data provided in the annual world petroleum reports of BP, for example (BP, 2020), and the history of world oil discoveries as monitored, until recently, by organizations that followed peak oil, such as Peak-Oil.org and others (The Oil Drum, 2008).

After 1984, when world oil discoveries and production more or less balanced at approximately 20 billion barrels (equivalent to approximately 55 million bopd), consumption and production greatly outpaced discoveries, as emerging economies tremendously increased their demand for oil. In that period, discoveries had their ups and downs, but each subsequent decade saw the total decrease significantly.

According to the recent Rystad Energy report (Rystad Energy, 2020) about world oil discoveries in recent years, in 2019, the production and equivalent consumption of oil reduced the known world oil reserve base by approximately 37.2 billion barrels, while discoveries in 2019 added approximately only 12.2 billion barrels to world oil stocks.

However, the trend towards replenishing an ever-smaller parcel of the amount of oil produced worldwide must continue, and even accelerate, in the coming years. That is due to the fact that, inexorably, the oil age will end, and surely within this century. The demand for oil will not be zero, but world oil producers will no longer be the dominant players in the world economy.

It would be useless to continue investing money and effort in the search for new discoveries, if they will not ever be produced after the end of the oil age. That is a simple logic that any oil company understands, even the national oil companies of countries heavily dependent on oil production, such as many OPEC members, including giants of the oil world, such as Saudi Arabia, Kuwait, Iran, Iraq and others.

Thus, an ever-smaller parcel of the oil produced globally needs to be replaced every year. And that annual oil reserve replacement must be represented by discoveries of ever-larger oil accumulations (reservoirs), with characteristics of resilience regarding the energy transition that will occur alongside the end of the oil age. That entails discovering oil reserves that exhibit high productivity and low production costs.

New discoveries will need to allow production that is viable even under lower oil prices, which will be the case, as other energy sources become more competitive and displace hydrocarbons from the world energy mix. Investing in new discoveries will only be worthwhile if they will result in production at low cost, with production techniques that are well established, and with the least environmental impact possible.

It is not surprising, then, that the Brazilian pre-salt trend stands out as the petroleum province that attracts the most attention and investments, globally. It is in the Brazilian pre-salt that some wells achieve a production of over 60 thousand bopd (not only in one, but in three wells), and where 66 wells produced over 20 thousand bopd, in November of 2019 (ANP, 2019).

In a world that continues to demand over 100 million bopd, and where new discoveries will need to be focused on world class accumulations, in order to be economically viable, industry attention and investments must turn to Brazil.

The world oil industry has gradually come to that conclusion, as well (Bloomberg Businessweek, 2019). Brazil is well positioned to garner a large part of investments in exploration and production, over the next few years. The government need only stay clear of impairing that attractiveness with policies that may harm the confidence that Brazil currently enjoys regarding its energy and petroleum policies.

As the realization sets in regarding the extremely low current rate of discoveries, on a global level, in relation to annual oil consumption, the situation may seem somewhat worrisome for the world. However, the historical trend of production and discoveries shows that the arrival of the energy transition, from hydrocarbons to alternative energies, is indeed proceeding, slowly but surely. That will allow for new energy sources to emerge, develop and absorb the share of the world energy matrix that hydrocarbons will lose.

All that is quite positive for Brazil, not only because of its vast potential in renewable energy sources, which will increase their participation in the global energy mix, but also because Brazil harbors the oil plays that represent the largest and most attractive opportunities of the remaining years of the oil age.

References 

ANP, 2019. Boletim da Produção de Petróleo e Gás Natural. 31 Dec 2019. Available at http://www.anp.gov.br/arquivos/publicacoes/boletins-anp/producao/2019-11-boletim.pdf.

BP, 2020. Statistical Review of World Energy – all data, 1965-2018. Available at https://www.bp.com/content/dam/bp/business-sites/en/global/corporate/xlsx/energy-economics/statistical-review/bp-stats-review-2019-all-data.xlsx.

Bloomberg Businessweek, 2019. Exxon Is Back in Brazil—and Betting Big on Deepwater Oil. Online 20 Sep 2019. Available at https://www.bloomberg.com/news/articles/2019-09-20/why-exxon-is-returning-to-brazil?srnd=businessweek-v2.

Financial Times, 2017. Oil and gas discoveries dry up to lowest total for 60 years. Online 12 Feb 2017. Available at https://www.ft.com/content/441d0184-f13f-11e6-8758-6876151821a6.

Rystad Energy, 2020. Global Oil and Gas Discoveries Reach Four-Year High in 2019, Boosted by Exxonmobil’s Guyana Success. Online 10 Jan 2020. Available at https://www.rystadenergy.com/newsevents/news/press-releases/global-oil-and-gas-discoveries-reach-four-year-high-in-2019/.

The Oil Drum, 2008. Peak Oil Overview - March 2008. Online 25 May 2008. Available at http://theoildrum.com/node/4041.

About the author: Cleveland M. Jones, DSc is a professor and associate consultant at CEGeo; researcher at INOG - National Institute of Oil and Gas / CNPq; member of the Geosciences Advisory Board - NXT Energy Solutions; president of the Brazilian Environmental Academy of Letters - ABAL; president of IPGPar - Instituto Pró Gestão Participativa

Facebook: www.facebook.com/clevelandmjones; LinkedIn: www.linkedin.com/in/clevelandmjones; Lattes: http://lattes.cnpq.br/2858652663353677

Chico Mendes Award, Petrópolis City Council, 2019