Maxted, one of his generation's most successful oil finders, has
looked around the world and says plenty of work remains for companies
and professionals willing to take on the challenges of exploration.
remarks came during his Michel T. Halbouty lecture at the recent
AAPG Annual Meeting in Dallas, when he reminded the audience that
total discovered global liquid reserves are estimated at 1.9 trillion
barrels, and that petroleum today accounts for about 60 percent
of the earth's energy needs.
will continue through about 2050, he said, when natural gas and
associated liquids will increasingly be the fuels of choice.
oil yet to be found is estimated at 600 billion barrels, suggesting
an ultimate potential resource base of 2.5 trillion barrels," said
Maxted, who is founding partner of Kosmos Energy LLC and former
executive with Triton Energy.
basis, 25 percent of our worldwide oil endowment is still to be
found — this is a lot of oil," he added. "Thus, the industry still
has a significant future, with the next several decades being particularly
total oil discovered, about 850 billion barrels — or 48 percent
— have been produced. Production increased about 2 percent per
year through the 1990s to 28 billion barrels a year in 2000.
end of the last millennium, conventional oil reserves had declined
to approximately 1.05 trillion barrels, at a rate of 3 percent per
this trend suggests global oil production will peak between 2020
and 2030, he noted.
are important here, he said:
- While a lot of oil
has not yet been found, "we have already entered the mature phase
of our industry," he said. "Our challenge will be to find this
oil in order to defer and minimize the inevitable decline in production
capacity, which is caused by demand outpacing new discovery."
- Supply may be expected
to tighten and there will be a sustained higher commodity price
going forward — "and commodity price is the overarching driver
of the upstream petroleum industry," he said.
Were the Days
trends in the 1990s hold a harbinger of future exploration, Maxted
the 1990s, total petroleum found in giant fields of greater than
500 million barrels of oil equivalent was 156 billion barrels of
oil equivalent in 77 fields. Three times more gas than oil was found,
and 60 percent of the new fields were in the Middle East.
percent of the giant fields discovered during the decade were in
deep water, and 30 percent of new oil was found in Africa.
perspectives are important to recognize about exploration in the
1990s," he said:
oil and gas discoveries in the 1990s may be rationalized into four
"business opening" themes, he said. These include:
- New technology —
including 3-D seismic and advances in drilling and production,
which allowed the global exploration of the Tertiary deepwater
- New geography, which
provided ideological change — particularly the opening of the
former Soviet-bloc countries and the advent of international participation
in OPEC countries.
- Increasing oil prices
— this could lead to the reopening of former exploration areas
as well as new ones, including those in remote interior basins
of continents or offshore rift/passive margins in high latitude
- Emerging gas/LNG
markets — which has stimulated worldwide exploration for gas.
geology may through secondary exploration develop new plays and
fairways in established petroleum provinces or open new areas, he
does the future of exploration hold?
have entered a new era with different characteristics relative to
previous phases," Maxted said.
- Strengthening oil
prices in the late 1990s will likely continue, and the industry
should plan its business on the assumption of strong, long-term
- There has been a
change in the relationship of oil prices, the stock market and
E&P company share prices — E&P sector stock prices are
not rising in line with recent oil price increases, he said.
is evident," he said. "I believe there are concerns about the potential
for profitability due to cost pressures and continued anticipation
of a price pull-back and company growth due to opportunity constraints
and reinvestment ratios.
commodity prices remain high, and should the industry be able to
manage costs, then its future will hinge on the ability to invest
in new opportunities for reserves and production growth," he continued.
"If we successfully achieve this, then E&P stocks should be
will not be easy to achieve, he added. From a growth perspective,
reserves and production for a large number of U.S. companies have
been generally flat over the last five years and neither is expected
to increase dramatically going forward — in fact, companies will
continue to face the challenge of simply replacing reserves and
last six years, industry production costs have risen by more than
30 percent from an average of $10.65 per barrel of oil equivalent
to $13.95, despite a major focus on reducing costs.
of current production may be expected to continue to rise," he said.
"New, cheaper sources of reserves and production are required to
dilute these average total unit costs."
650 billion-barrel-USGS-estimate of global yet to find volumes of
oil, 90 percent is outside North America. One third of the future
finds are expected to be in the Middle East and North Africa with
one fifth in each of the Former Soviet Union and South and Central
is expected to host one tenth of the world's undiscovered oil.
oil and gas finds in the coming decade and beyond may be expected
to be primarily focused in presently proved, developing and emerging
petroleum provinces and their extensions," he said.
on results to date, the current decade may potentially be a time
of greater exploration success than the 1990s."
the four themes that defined the 1990s will come into play, he said:
- Technology will allow
the ultra-deepwater fairways of the established Tertiary to Recent
delta systems on the continental passive margins to be explored
with success. These include the Mississippi, Niger, Congo and
Nile delta systems. Also, new delta systems may be proven — the
Amazon, for example. New deepwater continental margins may emerge
as well — notably East Africa, India, northeast South America,
the Caribbean, circum-Mediterranean and Australia/Southeast Asia
for either oil or gas/LNG.
- New geographies will
continue to evolve and yield new giant fields, including OPEC
countries like Libya and former disputed zones such as the Nigeria-Sao
Tome Joint Development Zone in West Africa.
- Higher prices could
open additional new geography in such areas as continental passive/rift
margins in the higher latitudes of the Arctic, northern Norway
and northern Russia, as well as the interior, intra-cratonic rift
basins of Africa and the fold/thrust/foreland basins of western
South America, he said.
- And then there's
theme, in combination with one or more of the other primary themes
I mention, has the most potential to impact future oil and gas finds
by developing new plays and fairways in existing hydrocarbon systems
and by opening new petroleum provinces," Maxted said.
challenge for the upstream petroleum industry continues to be consistent
delivery and enhancement of value for company shareholders, partners
and host governments by replacing and increasing reserves and production,
and being able to do it at a competitive cost," he maintained. "For
the exploration sector, the challenge is to establish a track record
of successful performance, which will re-establish corporate and
investor belief in the role and importance of exploration to establish,
sustain, renew and build E&P companies.
performance means finding what we say we are going to find and meeting
expectations by delivering on predictions."