International Energy Agency Report on Oil Price
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Saturday, 15 November 2008 |
According to the International Energy Agency’s (IEA) World Energy Outlook report, the sources of oil, the cost of producing it and the prices that consumers will have to pay for it are extremely uncertain. "One thing is certain, said Mr. Nobuo Tanaka, Executive Director of the IEA, "while market imbalances will feed volatility, the era of cheap oil is over."
The IEA has undertaken an unprecedented field-by-field analysis of the historical production trends of 800 oilfields. This indicates that decline
rates are likely to rise significantly in the long-term, from an average of 6.7% today to 8.6% in 2030. "Despite all the attention that is given to
demand growth, decline rates are actually a far more important determinant of investment needs," observes Mr. Tanaka.
Commenting David Smith, Vice President, Energy, at Celerant Consulting, said: "In times of uncertain supply, conservative investment and ever increasing demand oil companies must prioritise maximising production. Traditionally they would have turned to the acquisition of new reserves as the main driver of increased output, but with reduced investment in new fields this is no longer a practical strategy. Investment in new technologies, light well intervention, enhanced oil recovery and digital oil fields all offer the potential to boost production. But the greatest rewards for oil companies operating in difficult times are from optimising the operation’s existing assets – both technical and human."
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