November 18, 2013
Publisher: PESGB Magazine
Author: Espen Erlingsen
Date: November 30, 20014 (published in PESGB Newsletter in January 2014 volume)
As we get settled into the new year, it might be good to take a look at the year we just left behind. What were the key events for the E&P industry in 2013? Where do we see growth in terms of production, discovered volumes and investments? And what does this mean for the future market?
2013: US is back on top
Figure 1: Liquid production profile for selected top producing countries- kboe/d (Source: UCube from Rystad Energy).
In 2013 the USA passed Saudi Arabia as the world’s largest liquid producer; a position the US had last enjoyed in the early 90s. Since 2008 U.S. liquid production has steadily increased by about 7% annually. The main driver for this growth is clear – the shale revolution. Total U.S. shale production currently is at 3.8 million boe/d. Light oil and NGL from shale plays like Eagle Ford, Bakken and Permian have been flowing into the market, resulting in additional production of more than 1 million boe/d per year.
Figure 2: North America liquid supply-demand balance koe/d (Source: NASReport from Rystad Energy; Demand by IEA WEO).
The U.S. growth is expected to continue as companies keep up their investments in shale drilling. Rystad Energy forecasts North America to reach self-sufficiency for liquids by around 2020. This will have large geopolitical impacts as the OPEC countries will have to gradually divert their exports from the USA towards Asia.
2013: Offshore exploration lower than years before
Figure 3: Total offshore discovered volumes by continent- Million boe. (Source: UCube from Rystad Energy).*
* Since November 2013, the 2013 offshore discoveries have been revised upwards to 11.5 billion boe.
Offshore exploration in 2013 was lower than in previous years. While in 2012 more than 20 billion boe were discovered through offshore exploration, the total discovered volumes for 2013, as of November 2013, are estimated to be at around 10 billion boe. Brazil ranks top in terms of highest discovered resources. After Brazil we see the USA, Mozambique, Australia and Norway with highest offshore discovered volumes in 2013.
While discovered volumes have gone down in 2013, investments in exploration stayed at almost the same level as 2012. For 2013 around 75 BUSD was spent on offshore exploration. Looking ahead, Rystad Energy believes that the offshore exploration activity will stay at the current level for the next years, where North America and Africa will be the hot spots.
2013: First year with single digit growth in investments since 2009
From 2009 to 2012 there has been a tremendous development in total E&P investments, with an average yearly growth of around 15%. Australia with its LNG projects and North America with its shale revolution have been the leading countries in terms of growth. In the same period the oil price has increased from 62 USD/bbl to 112 USD/bbl. The increase in oil price has enabled the companies to finance the new investment.
In 2013 almost 850 BUSD were invested in the E&P industry, with North America being by far the largest region with total investments of around 260 BUSD, around 120 BUSD related to shale developments. However, 2013 is the first year since the 2008 recession with year to year declining oil price. This has resulted in lower margins for the E&P companies, which again has led to a high focus on cost efficiency and cost reduction. 2013 shows therefore a single digit growth of about 7%.
For 2014 and 2015 we expect a similar path as in 2013, with an annual growth rate of approximately 7%. After 2015 growth could again reach double digits as discoveries made over the previous years are the in the development stage.
- End -
Contact: Espen Erlingsen, Analyst
Phone: +47 24 00 42 00
Mobile: +47 41 44 77 61
Contact: Julia Weiss, Marketing Manager
Phone: +47 24 00 42 90
Mobile: +47 48 29 87 61
About Rystad Energy
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy consulting and research products.
Rystad Energy’s products and services are intended for E&P and oilfield service companies, investors, investment banks and governments.
• Global databases – online, complete and integrated field-by-field databases covering the E&P and oilfield service industry
• Consulting services – providing support on strategy, transactions, market assessments, macro trends, etc.
• Research products – reports and tools on selected regional topics, including NASAnalysis products
Rystad Energy’s headquarters are located in Oslo, Norway, with additional research teams in India. Further presence has been established in the UK (London), USA (New York & Houston), Russia (Moscow), for Africa as well as South East Asia.
About the Author
Espen Erlingsen is the lead NCS Analyst at Rystad Energy. His areas of expertise include company and acreage valuation, breakeven price analysis and international petroleum fiscal regimes. Espen holds an M.Sc. in Industrial Economics from the Norwegian University of Science and Technology.
UCube is an online, complete, and integrated field-by-field database, including reserves, production profiles, financial figures, ownership, and other key parameters for all oil and gas fields, discoveries, and exploration licenses globally. UCube includes 65,000 oil and gas fields and licenses, portfolios of 3,200 companies, and it covers the time span from 1900 to 2100.
The oilfield service database DCube is an asset-based, bottom-up database for forecasts on oilfield service revenues. DCube is an unprecedented analysis, forecasting, and decision tool for the global oilfield service market, incorporating all important market drivers.
NASReport is a unique report on shale play activities published on a quarterly basis. It contains a review of the latest development activities for selected plays, a company portfolio summary of selected companies, a regional summary report and rotating industry focus topics.