Per Rystad’s independent and highly regarded global energy assessment:
“The (worldwide) drop in reserves is driven by the 30 billion barrels of oil produced last year, plus a significant reduction in undiscovered resources, to the tune of 120 billion barrels. The US offshore sector has contributed the largest total to that drop, where 20 billion barrels of oil will remain in the ground, largely thanks to leasing bans on federal land.“
The decline in reserves should come as no surprise to those who follow the US offshore sector. Note the sharp decline in exploratory drilling in the (updated chart below) and the calls for action on this blog a year ago and more recently.
The OCS oil and gas program requires a sustained, consistent commitment by government and industry. Such a consistent commitment, even though required by legislation, is difficult to achieve in our political system, .
The proposed 5-year leasing plan portends further declines in the OCS program. Those who are celebating the progam’s downfall may not be so smug 5-10 years from now.
The commitment by the oil and gas industry has also been uneven and in some cases disappointing. BOE continues to be troubled by the reduction in exploration by some companies and the decision by others, including leading US companies with a long history of Gulf of Mexico operations, to exit the US offshore sector completely (see the chart below). The exploration decline began before the leasing shutdown (now 600 days in duration). Inconsistent signals from the Federal government and corporate directors, market considerations, and competing investment opportunities are major factors, but there are no doubt other considerations. Constructive dialogue to address these issues is badly needed.
Bud's Offshore Energy (BOE) 