IEA Flags Energy Security Risk as Production Drops at Existing Oil, Gas Fields

A new report released by the International Energy Agency shows that if current oil production levels aren’t maintained, the world could face heightened energy security risks. The agency determined that the rate at which outputs of oil and gas fields were reducing over time had substantially quickened around the globe. 

It argues that this is primarily because of increased reliance on shale formations and deep-sea oilfields, suggesting that producers will have to work significantly harder to keep production at present levels. These developments come as the dialogue concerning the future of oil and gas frequently emphasizes consumption patterns, while the elements influencing supply receive far less scrutiny. 

The recently released report focuses on shifting the narrative by revisiting the agency’s earlier work on rates of decline and examining recent changes, using output data from roughly 15,000 oil and gas fields globally. 

Fatih Birol, the agency’s Executive Director, stated that only a fraction of investments into upstream oil and gas goes into meeting rising demand, with a significant portion being allocated to compensating for supply declines at existing oil fields. He explains that for oil specifically, a lack of upstream investment would remove from the global supply an amount equal to the combined annual output of Norway and Brazil. 

This, he notes, means that the industry needs to work much harder simply to maintain current levels, with considerable consequences for energy security, supply balances and emissions. 

According to the report, rates of decline vary across geographies and field types. For instance, smaller offshore projects in Europe average declines of over 15% annually while large onshore oilfields in the Middle East decline by under 2% in the same period. Tight oil and shale gas experience even sharper reductions, with the report highlighting that without re-investment, production drops by over 35% within the first year and an additional 15% the following year. 

The report also compares current investments to a decade ago, noting that freezing upstream investment in 2010 would have reduced oil supply by just under 4 million barrels per day annually. Today, it continues, that figure has climbed to 5.5 million barrels per day while the rates of decline of natural gas have increased from 180 billion m3 annually to 270 billion m3. 

To keep oil and gas production steady over time, new resource development is therefore essential. The agency estimates that over 45 million barrels per day of oil and almost 2,000 billion m3 of gas from new conventional projects will be needed by 2050 just to sustain current levels. 

This report by the IEA highlights how important the exploration efforts of companies like GEMXX Corp. (OTC: GEMZ) are in ensuring that the world doesn’t run out of the needed oil and gas resources to meet its energy needs in the decades to come. 

NOTE TO INVESTORS: The latest news and updates relating to GEMXX Corp. (OTC: GEMZ) are available in the company’s newsroom at https://ibn.fm/GEMZ 

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