Conventional oil and gas discoveries during the past three years are at the lowest levels in seven decades and a significant rebound is not expected, according to a new report by IHS Markit. The low levels in discoveries come as a result of a pullback during the past 10 years in the wildcat drilling that targets conventional oil and gas plays—most drastically after oil prices collapsed in 2014. These trends have far-reaching implications that could limit future conventional reserves additions.
The decline in conventional discoveries was not only driven by low oil prices, but by competition from short cycle-time unconventional projects, and by financial investors who question long-term, high-cost, frontier projects, the report said. These factors, in turn, shifted drilling away from areas where potential discoveries could be larger, and reduced upstream exploration investment due to concerns about long-term oil demand.