Companies are finding lots of oil again
The oil industry is finding lots of hydrocarbons thus far in 2019, putting discoveries on pace to grow by 30% this year if they keep it up, the consultancy Rystad Energy said this week.
Why it matters: The finds by big players like ExxonMobil and Total are a sign of ample new supplies that could come online in coming years, which is likely to further ease concerns about a crude supply crunch down the road.
- It also signals why OPEC will face ongoing challenges in the years ahead in their quest to keep markets tight and prop up prices.
By the numbers: First-quarter discoveries of conventional oil and gas, which excludes shale, were 3.2 billion barrels oil-equivalent.
- Much of that came in February, when the 2.2 billion barrels of discoveries marked the highest monthly total since mid-2015, Rystad said in a short note.
What's next: "[T]he push for substantial new discoveries shows no signs of slowing down, with another 35 high impact exploration wells expected to be drilled this year, both onshore and offshore," Rystad wrote.
Quick take: The big finds are another sign that fears of a crude supply crunch opening up by the early 2020s likely won't come to pass.
- Some analysts feared a precarious situation emerging because spending on finding and developing new supplies cratered around 2014.
- But 2019 is set to be the third straight year of upstream investment increases, per the International Energy Agency.
- Bigger-than-expected U.S. shale growth has also eased concerns.
But, but, but: "Forecasts of a supply gap persist, but they’re being pushed further out into the future," Bloomberg reported in late January, and IEA has warned against complacency.