Later, 4:55 p.m. CT: talk about mixed messages. In the original post, we were told how conventional oil makes up 93% of the world's oil mix and much/most of that comes from the Mideast. And now we get this banner headline from oilprice:
How is cognitive dissonance spelled?
It's easy to forget this when focused on the Permian and the Bakken, but look at this, from Rigzone:
Conventional oil makes up around two-thirds of the world’s recoverable oil resources and accounts for 93 percent of today’s oil mix. More than half of this oil comes from oil fields that are past their peak and declining, revealed by a loss of about 3 million barrels of output last year.
To accommodate this yearly natural decline from old wells and to satisfy rising demand, the world needs a fresh supply of 5.7 million barrels each year according to the International Energy Agency (IEA).
With so much attention focused on the exceptional growth in U.S. tight oil supply to 11.5 million barrels per day (MMbpd) this year and forecasts of 12 MMbpd in 2019, it is easy to forget the pivotal role of the Middle East in global oil supply.
Rystad Energy analysts expect Middle Eastern oil production to grow by 2.7 MMbpd by 2025, driven largely by supply additions of 1.5 MMbpd from Iraq and another 1.2 MMbpd from the re-opened Neutral Zone—the area between Saudi Arabia and Kuwait—as well as the UAE and Iran.
OPEC countries hold nearly 82 percent of the world’s crude oil reserves of which the bulk 65 percent are in the Middle East, led by Saudi Arabia, Iran, Iraq, Kuwait and the UAE. The world’s cheapest oil producers, with costs between $9 and $10 a barrel in 2016, were respectively Saudi Arabia, Iran and Iraq because their oil lies close to the surface and is pooled in mega fields.
Moreover, the Middle East's producing countries have some of the lowest oil decline rates in the world, which matters greatly since, as one estimate suggests, the difference between a 5.7 percent (2017) and a 7.5 percent (2016) decline rate yields another 900,000 barrels online.
Rystad Energy notes that output from conventional fields beyond the Middle East peaked in 2010 and they expect it to continue falling to 45.6 million barrels a day, a 2.3 million barrel decline from current levels.
This is largely due to the oil price collapse in 2014, which triggered fierce cuts to exploration budgets in 2015 and 2016, flat investment during 2017, and only a slight uptick this year.
In essence, capital investment fell from $750 billion to $460 billion in 2016 and has yet to recover, says the IEA.
The impact is seen in discoveries of new oil, which fell to a record low in 2017 with less than 4 billion barrels of crude, condensate and NGLs.
Discoveries in 2018 are led by offshore Guyana with an estimated 4 billion barrels of oil equivalent, the Barents Sea, the north slope of Alaska, the Dorado field offshore Australia and new finds in Oman and by Norway.
However, unlike oil fields in the Middle East and U.S. tight oil for that matter, conventional offshore oil fields are huge, complex and expensive projects that take years to come to fruition. This has encouraged big energy companies in recent times to invest in acreage, drilling wells and hydraulic fracturing in U.S. shale, especially in the premier Permian Basin stretching from Texas to New Mexico. Drilling a tight oil well costs between $5 and $10 million, is fast—measured in days rather than years—and brings a return on investment within months.More at the link.
This data point from the article is irrelevant and results in questionable credibility of the entire article:
The world’s cheapest oil producers, with costs between $9 and $10 a barrel in 2016, were respectively Saudi Arabia, Iran and Iraq because their oil lies close to the surface and is pooled in mega fields.