New analysis forecasts potential supply decline in coming years.

Discoveries of new oil sources outside North America fell to their lowest levels since 1952, potentially portending a “supply gap” for oil over the coming years. That’s according to a new analysis from IHS, which reported that only 2.8 billion barrels-worth of oil was discovered outside North America in 2015, the lowest figure in decades.

IHS says that continued low oil prices have forced oil and gas companies to cut back on their exploration and drilling efforts as earnings tumble. But that could mean that over the coming years, companies don’t produce enough oil supplies to meet growing global demand.

“We’ve seen four consecutive years of declining oil volumes, which has never happened before,” director of IHS Energy Leta Smith said in a statement. “The bottom has completely fallen out for conventional exploration, and the result portends a supply gap in the future that is going to be challenging to overcome.”

IHS says that the number of new exploratory oil wells drilled in “deepwater” areas fell 20 percent last year, while “ultra deepwater” (more than 5,000 feet deep) drilling dropped 40 percent.

“The fall in discovered volumes for conventional oil outside North America, in particular, has been steady and dramatic during the last few years,” Smith said.

The sharp decline in oil discovery overseas has been countered by growth of extraction from North American shale oil reserves, IHS says. Overall, oil supply is expected to continue to outpace demand. Nonetheless, IHS says that shale oil will only supply 10-15 percent of the world’s demand by 2040, so traditional drilling methods will still be required.

Source: IHS

Be part of something big