Oil Discoveries at 70-Year Low

Oil discoveries in 2015 were at a 70-year low. There were only about a tenth as much discovered as there has been annually on average since 1960.

    And explorers are expecting to find even less in 2016, which is stirring up new fears about their ability to meet future demand, according to (Bloomberg).

    Drillers have severely cut exploration budgets since oil prices dropped to half during the price collapse two years ago. There have been 2.7 billion barrels of new supply discovered in 2015, which is the smallest amount since 1947, according to Wood Mackenzie. And 2016 isn't looking so hot either: only 736 million barrels of conventional crude has been discovered since the end of July.

    The US Energy Information Administration (EIA) estimates there will be a global oil demand increase from 94.8 million barrels per day to 105.3 million barrels in 2026. There is some hope that the US shale boom could help with the gap, but growth has been stunted in the industry with prices sitting below $50 per barrel.

    Bloomberg spoke with Nils-Henrik Bjurstroem, a senior project manager at Rystad Energy, who said that discoveries from conventional drilling are "at rock bottom," which will have a huge impact on oil and gas supply.

    For the moment, global inventories have been flooded by output from Russia and OPEC in an effort to defend market share; but despite this, the under-investment that's been happening in the industry will be felt as soon as 2025 according to Bjurstroem. "Producers will replace little more than one in 20 of the barrels consumed this year," Bloomberg reports from Bjurstroem's findings.

    Global spending on exploration, including seismic studies and drilling, were at about $100 billion in 2014 but are at just $40 billion this year, according to Andrew Latham, Wood Mackenzie's vice president for global exploration.