The world needs to develop new oil and gas resources just to keep output flat amid faster declining rates at existing fields, the International Energy Agency (IEA) said on Tuesday in a major shift in its narrative from 2021 that ‘no new investment’ is needed in a net-zero by 2050 scenario.
The rates of decline at operating oil and gas fields have accelerated in recent years, largely due to higher reliance on shale and deep offshore resources, said the IEA.
The agency is under pressure from the Trump Administration to return to its core mission to help protect global security of supply, instead of pushing the net-zero agenda it has been doing so far this decade.
A new IEA report, The Implications of Oil and Gas Field Decline Rates, said on Tuesday that if the industry has to maintain current levels of production, more than 45 million barrels per day (bpd) of oil and around 2,000 bcm of natural gas would be needed in 2050 from new conventional fields.
Even with projects ramping up and others approved for development and not yet in production, a large gap still exists “that would need to be filled by new conventional oil and gas projects to maintain production at current levels, although the amounts needed could be reduced if oil and gas demand were to come down,” the IEA said.
“Only a small portion of upstream oil and gas investment is used to meet increases in demand while nearly 90% of upstream investment annually is dedicated to offsetting losses of supply at existing fields,” IEA Executive Director Fatih Birol said.
“Decline rates are the elephant in the room for any discussion of investment needs in oil and gas, and our new analysis shows that they have accelerated in recent years,” Birol added, finally acknowledging what the industry has been saying for years—underinvestment threatens global energy supply.
“In the case of oil, an absence of upstream investment would remove the equivalent of Brazil and Norway’s combined production each year from the global market balance, Birol added. “The situation means that the industry has to run much faster just to stand still.”
By Tsvetana Paraskova for Oilprice.com
