Non-OPEC conventional oil: Production decline, supply outlook and key implications

Abstract

The prediction of oil production is a vital task for developing oil field strategies, upstream investment opportunities, future production plans, and the global oil market supply. This paper addresses the following strategic question: How much new oil production capacity is required to bridge the expected supply gap due to the production decline of existing non-OPEC oil-producing fields? The paper analyzes the decline in non-OPEC conventional oil production, develops an outlook for the supply gap, estimates the required additional capacity, discusses the factors impacting the production decline, and presents key policy implications. Results of analysis show that non-OPEC conventional production declines annually at 3.5% excluding ramping-up fields and 2.5% including nondeclining fields by 2017. The supply gap due to this decline will be 4.4 million barrels per day (MMBD) in 2023 under current production and economic conditions, where an additional production capacity of 8.1 MMBD by 2030 is required to maintain 2017 production levels. A 1% shift in the current decline rates may result in either adding or removing approximately 3.4 MMBPD from the global oil market in 2030. Possible sources for bridging the expected global supply gap are, namely, the use of OPEC+ oil supply led by Saudi Arabia and Russia, the temporary use of OPEC spare capacity, the use of nonconventional oil, and the reserves growth and replacement. The findings of this study provide a guide for policymakers in the oil markets, upstream operators, national and international oil companies, and oilfield service providers seeking to develop effective upstream development strategies, engage in proper planning, and identify oil investment opportunities.