Most incremental oil and gas will come from OPEC – if they invest enough

International Energy Agency : Economist, engineer
World oil supply is projected to rise from 84 mb/d in 2007 to 106 mb/d in 2030 in the Reference Scenario.
World oil supply is projected to rise from 84 mb/d in 2007 to 106 mb/d in 2030 in the Reference Scenario. Netting out processing gains in refining, global production reaches 104 mb/d. Although global oil production in total is not expected to peak before 2030, production of conventional oil — crude oil, natural gas liquids (NGLs) and enhanced oil recovery (EOR) — is projected to level off towards the end of the projection period. Conventional crude oil production alone increases only modestly over 2007-2030 — by 5 mb/d — as almost all the additional capacity from new oilfields is offset by declines in output at existing fields. The bulk of the net increase in total oil production comes from NGLs (driven by the relatively rapid expansion in gas supply) and from non-conventional resources and technologies, including Canadian oil sands. The bulk of the increase in world oil output is expected to come from OPEC countries, their collective share rising from 44% in 2007 to 51% in 2030. Their reserves are, in principle, large enough (and development costs low enough) for output to grow faster than this. But investment by these countries is assumed to be constrained by several factors, including conservative depletion policies and geopolitics. Saudi Arabia remains the world’s largest producer throughout the projection period, its output climbing from 10.2 mb/d in 2007 to 15.6 mb/d in 2030. Non-OPEC conventional oil production is already at plateau and is projected to start to decline by around the middle of the next decade, accelerating through to the end of the projection period. Production has already peaked in most non-OPEC countries and will peak in most others before 2030. Falling crude oil and NGLs production is largely offset by rising non-conventional output, which keeps total non-OPEC output broadly flat over the second half of the projection period. Conventional capacity, net of natural production declines at existing fields, is set to grow in the near term, but dwindling new discoveries and a fall in the size of new fields are expected to drive up marginal development costs, leading to a drop in output. The projected increase in global oil output hinges on adequate and timely investment. Some 64 mb/d of additional gross capacity — the equivalent of almost six times that of Saudi Arabia today — needs to be brought on stream between 2007 and 2030. Some 30 mb/d of new capacity is needed by 2015. There remains a real risk that under-investment will cause an oil-supply crunch in that timeframe. The current wave of upstream investment looks set to boost net oil-production capacity in the next two to three years, pushing up spare capacity modestly. However, capacity additions from current projects tail off after 2010. This largely reflects the upstream development cycle: many new projects will undoubtedly be sanctioned in the near term as oil companies complete existing projects and move on to new ones. But the gap now evident between what is currently being built and what will be needed to keep pace with demand is set to widen sharply after 2010. Around 7 mb/d of additional capacity (over and above that from all current projects) needs to be brought on stream by 2015, most of which will need to be sanctioned within the next two years, to avoid a fall in spare capacity towards the middle of the next decade. Production of natural gas is also set to become more concentrated in the most resource-rich regions. Some 46% of the projected growth in world gas production in 2006-2030 comes from the Middle East, its output tripling to around 1 trillion cubic metres (tcm) by 2030. About 60% of the region’s incremental output is consumed locally, mainly in power stations. Most of the remaining increase in world output is provided by Africa and Russia. If investments in these countries falter, lower gas supply could lead to greater reliance on coal and higher CO2 emissions.

WEO 2008