Photo by: Bloomberg
PERTH (miningweekly.com) – Mining major BHP Billiton estimates that some 30-million barrels a day of new oil supply will be needed by 2025 to meet global demand.
BHP president for petroleum operations Steve Pastor said in Texas, this week, that, based on expectations of near 1% a year growth in global demand, and a 3% to 4% a year decline in natural field, the world would need nearly one-third of its current global demand in new supply.
“Oil shale plays a part in filling the gap, but it's not enough,” he added.
“We think the core oil shale positions, the sweet spots, are likely to be developed first and fairly rapidly over the next five to seven years. Away from the sweet spots, oil shale development is inevitably higher on the cost curve and typically a lot gassier.”
Pastor said growth from Organisation of the Petroleum Exporting Countries (Opec) was also required, but would not be enough to meet demand on its own.
Pointing to data from the International Energy Agency (IEA), Pastor noted the call on Opec countries to raise the 32.2-million barrels of oil a day in 2016 to 34.3-million barrels of oil a day in 2020 and 35.8-million barrels of oil a day in 2022.
The IEA concluded that more investment was needed in oil production capacity to avoid the risk of a sharp increase in oil prices towards the end of its 2022 outlook period.
Pastor noted that while BHP agreed that new conventional production was needed, the most significant opportunity for growth was with the deepwater developments.
“We believe top tier players who are particularly good at deepwater exploration and development can develop superior margins and value. But being competitive for capital requires not only good geology, geoscience and engineering to de-risk plays and prospects, it also requires attractive, competitive and stable fiscal terms that offer a reasonable, risk considered return on investment.”
Pastor said that cost and capital efficiencies were increasingly important, and would play as key a role in deepwater as they have in lowering breakeven prices in shale.