New shale oil may not be enough as big discoveries drop: report

The shale oil boom may not be enough to meet the rising global demand as investments in higher-risk mega-projects significantly dropped, bringing discoveries of new reserves this year to a record-low and replacing just 11 percent of what was produced, according to a report by consultant Rystad Energy.

The world may see output deficits as soon as 2019 without more investment in bigger supply, Bloomberg reported, citing Canadian producer Suncor Energy Inc.

Oil prices would need to climb to $80 and remain at that level for two years to justify the costly deep-water projects off the coasts of West Africa or Brazil, Adam Waterous, chief executive officer at Calgary-based Waterous Energy Fund, told Bloomberg. He added that even then, it could take a decade before crude from those investments would arrive on the market.

After more than a year of production limits by OPEC, prices have begun to recover, touching a 30-month high of more than $66 this week, compared with $44 in June.

Of the 10 oil projects sanctioned by companies in 2017 that targeted at least 50 million barrels of reserves, only two -- Repsol SA’s Ca Rong Do Block 07/03 in Vietnam and Exxon’s Liza Phase 1 off Guyana -- were classified as new fields, according to data provided by Wood Mackenzie.

Meanwhile, almost 80 percent of projects discussed for 2018 are new ones, as the gains are encouraging oil producers to boost capital expenditures by about 4.5 percent in 2018 to $261.6 billion.

Still, that level of investment is well below the peak of $495.9 billion in 2013, while large independent drillers said they won’t increase activity, even if crude rises.