Musings: Recent Oil Discoveries Gaining Media Attention
Last Thursday, The front page of The New York Times carried a story about the large number of new oil discoveries around the world. It focused on the recent discovery by Anadarko Petroleum (APC-NYSE) off West Africa and BP's (BP-NYSE) Gulf of Mexico find. The point of the article was to suggest that the high oil prices of recent years had stimulated the oil and gas industry to step up exploration and the effort was beginning to pay off. The article pointed out that during the first half of 2009 the industry had reported 200 meaningful discoveries of crude oil plus one huge natural gas discovery offshore Venezuela. According to IHS CERA, the oil discoveries so far have totaled 10 billion barrels of new reserves. At this pace, for all of 2009, the industry may discover 20 billion barrels, its best year since 2000. That year the Kashagan field containing an estimated 20 billion barrels was discovered.
The article did make note of the fact that 20 billion barrels of new oil reserves still pales by comparison to the fields the industry discovered in the 1970s -- Prudhoe Bay in Alaska, Ecofisk in the Norwegian sector of the North Sea and Cantarell offshore Mexico. The chart above showing the history of oil discoveries since 1930 and highlighting some of the more famous fields discovered in history shows clearly that even a 20-billion barrel discovery year will do little to alter the challenge the industry faces in growing oil output to meet rising global oil demand. This chart argues oil prices need to go higher.