From: Arab Times
LONDON, Dec 4, (RTRS):
Global oil and gas exploration projects worth more than $150 billion
are likely to be put on hold next year as plunging oil prices render
them uneconomic, data shows, potentially curbing supplies by the end of
the decade. As big oil fields that were discovered decades ago begin to
deplete, oil companies are trying to access more complex and hard to
reach fields located in some cases deep under sea level.
But at the same time,
the cost of production has risen sharply given the rising cost of raw
materials and the need for expensive new technology to reach the oil.
Now the outlook for onshore and offshore developments — from the Barents
Sea to the Gulf or Mexico — looks as uncertain as the price of oil,
which has plunged by 40 percent in the last five months to around $70 a
barrel. Next year companies will make final investment decisions (FIDs)
on a total of 800 oil and gas projects worth $500 billion and totalling
nearly 60 billion barrels of oil equivalent, according to data from
Norwegian consultancy Rystad Energy.
But with analysts
forecasting oil to average $82.50 a barrel next year, around one third
of the spending, or a fifth of the volume, is unlikely to be approved,
head of analysis at Rystad Energy Per Magnus Nysveen said. “At $70 a
barrel, half of the overall volumes are at risk,” he said. Around one
third of the projects scheduled for FID in 2015 are so-called
unconventional, where oil and gas are extracted using horizontal
drilling, in what is known as fracking, or mining. Of those 20 billion
barrels, around half are located in Canada’s oil sands and Venezuela’s
tar sands, according to Nysveen.
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