By on August 17, 2020

Ever since the first major oil fields were discovered at the start of the 20th century, the world has been on a never-ending hunt to see where else black gold might be hiding. Monetizing seepage areas goes back even further. But with global oil demand having dissipated on account of the pandemic, there’s little reason to spend cash on additional procurement.

Combine that with the green movement doing everything it can to convince governments there’s only one ethical way to handle energy, and we’re likely to be moving into an era where fossil fuels sell for less but cost more to harvest/utilize thanks to carbon emission regulations.

This has left oil companies pondering the true value of seeking new sources of oil, with some having already decided there’s no point.

Earlier this month, BP said it no longer had any interest in conducting exploratory surveys in new countries. It has what it needs for the foreseeable future, noting that pricing had become unstintingly low as swaths of the industry finds itself having to pay just to find someone to take surplus product off its hands. Meanwhile, oil-producing nations have cut output by record levels this year to curb their bloated supply and reduce worldwide inventories. The Organization of the Petroleum Exporting Countries (OPEC+) recently eased agreed-upon cuts to 7.7 million barrels per day (bpd) from 9.7 million bpd.

Rystad Energy AS expects roughly 10 percent of the world’s recoverable oil resources (representing around 125 billion barrels) to become obsolete in the near future. Using the Falkland Islands as an example, Bloomberg attempted to explain the ramifications in a recent report. Despite holding a sizable and mostly untapped oil reserve, the South Atlantic region won’t see any of its previously planned rigs going up.

From Bloomberg:

Larger companies have also begun voicing that realization for other projects. BP said in June it would evaluate its portfolio of discoveries and leave some undeveloped. Chief of Staff Dominic Emery already hinted last year at what kind of resources might never  “see the light of day.” Complicated projects could be shelved in favor of fields that are quicker to develop, such as U.S. shale, he said.

The pressure to curb emissions may also prompt companies to leave the most carbon-intensive reserves in the ground, as France’s Total SE acknowledged last month when it took an $8 billion writedown on carbon-heavy assets.

The list of projects most at risk includes deepwater discoveries off Brazil, Angola and in the Gulf of Mexico, said Parul Chopra, vice president for upstream research at Rystad. Canadian oil-sands projects such as the expansion of the Sunrise development in Alberta are also in doubt, he said.

While this may be a triumph for ecosystems in underdeveloped parts of the world, anywhere that has easy access to oil and doesn’t need additional refinement processes should be sitting pretty. Of course, it’s difficult to predict what will happen in the long run  especially with most oil production firms seeking to transition into energy companies with a greener public persona. Contributing factors include how we count carbon emissions in terms of oil procurement and refining, as well as how successfully national grids can be bolstered for the presumed influx of electric vehicles (and a higher reliance on renewable forms of energy).

That’s assuming non-fossil fuels are even capable of providing the amount of energy the world needs to keep humming, however.

[Image: Maksim Safaniuk/Shutterstock]

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42 Comments on “There’s Little Reason to Hunt for Fresh Oil in 2020...”


  • avatar
    Verbal

    Interesting timing then that the Trump administration is opening up the Arctic National Wildlife Refuge for drilling. With oil prices so low, will anyone even want to bother?

    • 0 avatar
      golden2husky

      Not to mention, its either a Refuge or its not. Since it is, all drilling should be banned unless there was such a draconian shortage of crude. We are awash with oil, the world is awash in oil. America is already energy independent, and has been for quite a few years. Nobody needs it now, or for the foreseeable future. This is just political BS – the Orange one pandering to his base. Which I don’t get – he’s got those votes locked down. – and this kind of stuff creates a risk of alienating swing voters.

      • 0 avatar
        Crosley

        The name “refuge” is silly, you can now legally drill there and the US should. 99.9% of that is still untouched, we have to be the only country stupid enough to not use natural resources.

        We’re not “energy independent” if say Saudi Arabia or Russia went offline with their oil, there would be a massive US shortage.

        I would rather send billion of dollars back into our own economy than send it elsewhere.

        • 0 avatar
          IBx1

          Crosley, you know we only import less than 10% of our oil right? A huge majority of what we import comes right up from Canada, too.

          • 0 avatar
            Crosley

            You’re talking about trillions of dollars there over a generation, even at “just” 10%.

            Would you rather send trillions to places like Saudi Arabia or Russia, or here?

            Also, we can export way more.

            It’s so funny that even really “liberal/socialist” countries like Norway “get it” and use the natural resources like offshore drilling to help the country. It has given them fabulous wealth.

        • 0 avatar
          Erikstrawn

          “IF” Saudi Arabia and Russia went offline, I would want the refuge untouched UNTIL that point.

          I’ve never understood people who argue that we should use up our oil reserves NOW while there’s not a crisis so that we’ll have it in the future if there is a crisis.

          Here’s a tip: when oil’s cheap, let’s buy everyone else’s oil. When it’s all gone and we’re the only ones who still have some, lets jack the price up. Why do we insist on selling our oil cheap? It’s bad economics.

          • 0 avatar
            Crosley

            Because it takes DECADES to get these projects off the ground because of idiot environmentalists. You can’t just turn on a spigot when we need it. Look at what happened in the 70’s or the mid-2000s.

            At some point, oil will be worth much less like coal in the future. Why not make trillions while it is worth something. The oil is still going to be extracted somewhere, might as well be the US getting the money and done in a more environmentally efficient manner than some 3rd world.

            It’s not like oil is interest in a savings account that makes money sitting idle.

        • 0 avatar
          Luke42

          @Crosley,
          “The name ‘refuge’ is silly, you can now legally drill there and the US should.”

          This is poor strategic thinking.

          The world will eventually run out of oil. We here in the USA should buy and use everyone else’s oil first, and save our own oil for endgame of the oil era.

          Or, we could end the oil era early (and screw over oil producing nations) by shifting to EVs. EVs have the advantage of being agnostic about where their energy comes from, so you don’t have to buy a new car when it makes sense to change fuels.

          The “drill baby drill” folks don’t seem to think about the long game much. Which country do you want to have lots of oil (and sell it for top dollar) in 2040? I’d prefer to hold out for a bit.

  • avatar
    Felix Hoenikker

    Renewable energy is already cost effective vs fossil fuels. The only thing missing is cheap storage aka batteries. Once this is achieved, the combination of renewable energy and electric cars will displace ICE. This will not happen quickly, but over the next two or three decades.

    • 0 avatar
      thornmark

      wrong

      CA Gov admitted it today

      watch “Planet of the Humans”, “renewable” energy is not cost effective and not reliable on a large scale – it is just the opposite

      • 0 avatar
        mcs

        Actually, renewable energy is cost effective. Planet of the Humans is pure fiction typical of micheal moore. It’s not grounded in facts just like the rest of the garbage he produces. For example, they misstate the efficiency of solar panels using a 20-year-old number. They also leave out the fact that there are now storage technologies to take energy from solar and wind and distribute it when it’s dark or the wind isn’t blowing. Lots of other errors. Moore is an idiot and always has been. They come up with a conclusion, then leave out any information that contradicts their narrative.

  • avatar
    randyinrocklin

    I have not seen any industrial metals(like stee) being produced by alternative sources. So go shove your idiot idea to all the ds’s out there. And keep dreamin’.

  • avatar
    randyinrocklin

    I have not seen any industrial metals(like steel) being produced by alternative sources. So go shove your idiot idea to all the ds’s out there. And keep dreamin’.

    • 0 avatar
      mcs

      “I have not seen any industrial metals(like steel) being produced by alternative sources.”

      Let’s correct that. Here are some links:

      https://www.cnbc.com/2019/12/07/first-us-steel-plants-powered-by-wind-solar-energy-are-coming.html

      https://www.investquebec.com/international/en/industries/aluminum/the-greenest-aluminum-in-the-world.html

      https://www.hydro.com/en-US/about-aluminum/renewable-power-and-aluminum/

      https://www.amm.com/Magazine/3790541/Features/The-rise-of-renewable-energy.html

      • 0 avatar
        randyinrocklin

        It’s only coming. It has not yet been tested. I am no scientist but you need thousands of Btu’s to melt metal. I do not know what output of BTUs these supposed steel plants will generate, but I’m not so sure if they can compete with coal or oil. You still have to convert the energy to produce heat with alternative sources which I think is a very inefficient use of energy.

        • 0 avatar
          Luke42

          @randyinrocklin:

          It’s only coming. It has not yet been tested. I am no scientist but you need thousands of Btu’s to melt metal.”

          You’re no historian, either.

          The PNW’s hydro-powered metal smelters are recent history, not untested future stuff.

          It does take a lot of electricity to do the work.

          Once the smelters closed, they started tearing down the dams because they were expensive to maintain, have an environmental impact, and are no longer needed. Also, the local First Nations folks aren’t too fond of the dams.

          The natural capacity to generate hydro power still exists there, though.

    • 0 avatar
      Luke42

      @randyinrocklin,
      “I have not seen any industrial metals(like steel) being produced by alternative sources. So go shove your idiot idea to all the ds’s out there. And keep dreamin’.”

      Do you know why there are/were so many aluminum producers in the Pacific Northwest?

      Cheap hydro power.

      Of course, those industries are in decline now and many of the dams are being removed. But, hydro power is a low-carbon and relatively green power source (though it does have its own environmental impact).

      Source:
      https://www.nwcouncil.org/reports/columbia-river-history/aluminum
      https://www.nwcouncil.org/reports/columbia-river-history/aluminum

  • avatar
    -Nate

    Interesting indeed ~ they per barrel prices have dropped yet the retail prices keep rising .

    ? What ever happened to the “de regulate and gasoline will be nearly free !” boot lickers paradise ? .

    Funny how they keep supporting those who only want to $teal from you, the working class .

    -Nate

    • 0 avatar
      thornmark

      I never saw anyone say gasoline would be nearly free but I do remember others who were wrong when they said that oil production was at peak and those who said US oil production was only going down

      It’s hard to see how sentient people can still support “green energy” scammers like that rent seeking AlGore who has profited handsomely from spreading what can only be seen as lies for profit

      in my state “green energy” isn’t green at all but it has doubled the price of electricity

      even Michael Moore recognizes that “green energy” is a scam – “Planet of the Humans”

  • avatar
    randyinrocklin

    Nobody remember the gas war days. Sad.

    • 0 avatar
      -Nate

      Au contrair mon frere…..

      (pardon my atrocious spelling) .

      -Nate
      Who clearly and keenly remembers it being a BIG DEAL to save ONE PENNY on a gallon of .27 cent gasoline .

      Now I often see a 35 cent difference in major branded gasoline directly across the street .

      Go figure .

      -Nate

      • 0 avatar
        randyinrocklin

        It used to be under 15 cents in some places in the 60’s.

        • 0 avatar
          -Nate

          ? Where ? .

          I was there at the time and don’t remember that .

          -Nate

        • 0 avatar
          Luke42

          @randyinrocklin,
          “It used to be under 15 cents in some places in the 60’s.”

          That was decades before I was born, and many decades before my three children were born.

          That era is history, and won’t be coming back. Except for the civil unrest, of course.

          • 0 avatar
            randyinrocklin

            I worked at a Chevron gas station during my HS years in 1967-1970 in Hawaii and gas was about 45 cents back then. They also had the high octane custom gas that had a bluish tint to it. I tried it on my 69 Mustang but it seem like it made a discernable difference.

      • 0 avatar
        Lorenzo

        Nate, that penny is now worth nearly 18 cents in today’s money. I got a $20 bill the year I turned 13, and was told to buy a nice sweater. Using the government inflation calculator, the twenty bought $172 dollars worth in today’s dollars. Inflation isn’t prices going up, it’s the value of the dollar going down.

  • avatar

    Isn’t it ironic that while Neo-Marxists in USA keep dreaming about renewables and banning the oil production and consumption, the real ones, Marxists who were in total control of the big country like Soviet Union for 70 years lived and died by the oil exports.

    • 0 avatar
      Old_WRX

      Inside Looking Out,

      The Neo-Marxists in the US have the enviable right to decide everything without having to worry about silly things like reality. How can one push idealism (=idiocy) to its highest limits if one has to worry about the details? The people running the USSR were in the unfortunate situation of having to deal with ugly old reality — forcing them to temper their idealistic slobber somewhat.

      • 0 avatar
        mcs

        Marxism driving renewables? Not from my perspective as someone that gets most of their income from an energy sector business. My tech business burns a lot of cash and it’s funded through my energy sector business. Instead of nice yachts, I buy a lot of really expensive computers. Anyway, at $40 a barrel, there’s not a lot of money to be made, so everyone is looking elsewhere. One thing is renewables. It’s definitely getting cheaper and you can make better money than $40 a barrel oil. The energy storage business is looking especially interesting where you buy and store excess power from solar and wind, then sell it when the price is higher. In addition to batteries, it’s being done with technology like pumped storage.

        So, it’s actually capitalism and technology driving renewables now. Not a lot of profit to be made in oil and there’s a lot of potential in renewables. Don’t believe the propaganda. I’ve seen people from saudi funded “institutes” publishing lots of propaganda lately so they seem to have a major disinformation push on.

  • avatar
    Imagefont

    The price of oil will go back up, trust me on this. It may take a little time but it will happen. And then it will go back down again, in a cycle.
    The BTU’s are buried in the ground and right now there is no “alternative energy” that can replace hydrocarbons. Demand for energy will only increase, not go down. High cost drives efficiency.
    There are tens of thousands of windmills in Texas and they are drilling for oil and gas more than ever. A temporary dip in demand due to the pandemic is just that – temporary. I wish it weren’t so but that’s the way it is.

    • 0 avatar
      mcs

      “There are tens of thousands of windmills in Texas and they are drilling for oil and gas more than ever. ”

      Hmmm, I don’t know about that. Endeavor and Autry Stephens is active now and just applied for 11 permits in the Spraberry field, but he was doing 5 or 6 a week last year. Things are dead for me right now. It’s tough to make a profit at $40 a barrel. I’ve been growing through the tech/AI side of my business, renewables, and investing in battery technology. Don’t know where you get your numbers, but the Texas Railroad Commission issues the permits and they publish the statistics. Take a look: https://www.yourbasin.com/news/local-news/texas-drilling-permits-and-completions-statistics-for-june-2020/

      • 0 avatar
        Imagefont

        Of course oil is down right now but OXY and Pioneer resources and others know that this will change. The prices will go back up, demand is not decreasing. Your battery technology needs a breakthrough and it’s not going to get it, merely repeating over and over again that renewables like solar and wind are economical and price competitive does not make it so. They are heavily subsidized and without those subsidy’s they wouldn’t exist except on a “hobby” scale.

        • 0 avatar
          mcs

          “Your battery technology needs a breakthrough and it’s not going to get it,”

          Batteries don’t need a single breakthrough. Like most technology, it advances through small quiet steady advances. Lots of advances in the metallurgy required to extend the life of batteries has occurred in the last couple of years. There have even been advances in the tools used to analyze the internal processes of batteries.

          “merely repeating over and over again that renewables like solar and wind are economical and price competitive …”

          Spreadsheets and analysis say they are. Solar is getting incredibly cheap. There have been advances in wind as well. It’s profitable without the subsidies. The subsidies just help you make your money back sooner.

          And again, your remark about batteries not getting a breakthrough is a baseless as your claim about increased drilling. You have no connection to any battery research labs and clearly haven’t been following the progress in the technology. Take a look at the patent filings from various companies and it tells a different story than what you’re saying. One solid state manufacturer says they’re expecting to start mass production next year. Toyota says solid state in mass production 2025. Toyota has even made tech advances over their original battery. Tesla has the Maxwell technology and a number of other improvements like tabless. Battery tech is moving fast. You’re clearly not following the technology and have no idea what’s going on in the sector. Batteries are everywhere and in just about everything. There is a huge market force beyond renewable energy and EVs driving the technology.

    • 0 avatar
      randyinrocklin

      They supposedly went all in on solar and wind mills here in CA, but they can’t keep up with demand, and now they got rolling blackouts in the middle of 100+ weather here right now. Yea right you damn tree huggers, you libturds f**ed it all up here.

      • 0 avatar
        Luke42

        @randyinrocklin,
        “They supposedly went all in on solar and wind mills here in CA, but they can’t keep up with demand, and now they got rolling blackouts in the middle of 100+ weather here right now. Yea right you damn tree huggers, you libturds f**ed it all up here.”

        Rolling blackouts were happening in California long before Renewable Energy was a thing.

        Investing in the national power grid (via private and public sources) is what it will take to fix these kinds of problems.

        Rolling blackouts are your tax savings at work!

  • avatar
    Tele Vision

    Oil isn’t going anywhere. There’s a glut at the moment due to the pandemic, that’s all. Even slightly-developed countries have an economy that’s tied to oil to some extent. My favourite scene is the Davos gig: hundreds of thousands of pounds of AvGas is burned at high altitude ( where it stays ) to avail the people who work for us of the opportunity to tell us to burn fewer hydrocarbons down where plant life can synthesize one of the byproducts of combustion into oxygen.

  • avatar
    Jeff S

    I don’t see us getting off of fossil fuel anytime soon. Maybe in the next 20 years we might be consuming a lot less oil and gas as the technology gets more advanced and less expensive. At $40 or less a barrel for oil the amount of exploration and production of oil has decreased more as a result of less demand. I do believe that in the next 30 to 50 years our dependency on oil will be considerably less and we will be driving more EVs but in the long run that is a good thing. It is good that we are using less coal and similar to coal our use of oil and gas will diminish over the long run.

    • 0 avatar
      highdesertcat

      Yup, I agree. And let’s not forget Natural Gas. They’ve got sooooooo much of it, they’re flaring it 24/7 in NM and TX, and probably other places as well.

  • avatar
    Lorenzo

    For those with money to invest, keep an eye on the oil companies that continue to explore, even if they don’t develop fields right away.

    Covid has put us in a recession, but put the world into a depression. Once we recover, the world economy will ramp up, and all energy will be in demand again.

    The companies able to tap discovered but undeveloped supplies will be the first to benefit.

  • avatar
    Jeff S

    Agree energy demand will increase once the economy recovers. I do believe that in the long run there will be more environmental regulations mandating stricter emission and efficiency standards on ICE and electric generation which will increase the use of EVs and alternative sources of energy in the next 20 to 50 years. Batteries need to get smaller, less expensive, more range, and more capacity. Infrastructure to support EVs will need to become more widespread. There will need to be other alternative sources of energy in addition to solar and wind especially in areas that don’t have an abundance of both. Additionally more oil and gas companies will transition to producing and providing cleaner energy alternatives but this will take some time.

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