BP reported a surprise increase in oil production from aging fields that, according to chief executive Robert Dudley, he hadn't seen in his close to four-decade career in the industry.
BP reported a 12-percent increase in oil production last year, to the highest level since 2010.
In an interview with Bloomberg on the sidelines of CERAWeek, Dudley said "I cannot remember ever in my career having seen a negative decline rate." And BP is not alone, either, Bloomberg's Javier Blas notes. Norwegian oil companies and Shell have also reported better production results from their mature fields.
While for the companies operating these fields should pat themselves on the back, it is a new problem for OPEC, which is currently focusing on U.S. shale as its main problem in keeping prices high.
Data from the International Energy Agency reveals that the phenomenon is not limited to a couple of supermajors, either. Last year, the agency said, oil production from legacy fields worldwide declined by a more modest pace, of less than 6 percent, compared with 7.5 percent a year earlier.
Analysts and industry insiders agree that this is a result of the 2014 price collapse that made everyone from the smallest independent to the supermajors much more careful with their spending. Related: 44 Things You Didn't Know About Oil
Shell's head of deepwater operations, Wael Sawan, told Blas that "Companies are focusing on the basics. So there was a massive re-focus on existing wells. It's the cheapest and most profitable barrel that companies can access."
Even with this good news not everyone agrees that Big Oil will repeat its strong performance from 2017 this year. As per the IEA, mature fields accounted for 51 million barrels of global daily production in 2017. In comparison, new conventional fields where production is yet to reach its peak, accounted for much less - just 16 million bpd. That's almost half the contribution of shale and oil sands, which stood at 30 million bpd last year.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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Comments
Rates of 50% and even 55% have been achieved in the North Sea, the Gulf of Mexico and in the “Shaybah oilfield” in Saudi Arabia.
This should not pose a problem for OPEC. Although most of OPEC oilfields are now mature, applying the latest technology that BP, Shell and Statoil have been using should enable them to enhance production. A case in point is the Kirkuk oilfield which has been producing non-stop since 1934. Iraq recently signed an agreement with BP to raise oil production from the Kirkuk oilfields to 1 million barrels a day (mbd). BP estimates that the Kirkuk oilfields which were discovered in 1927 still have 10 billion barrels (bb) of reserves.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London