In its annual account of global oil resources, Rystad Energy finds that Saudi Arabia has added enough recoverable oil resources to regain its top position, ahead of the United States and Russia.
The addition of 73bn barrels of recoverable oil since the publication of Rystad Energy’s 2016 annual review comes as a result of lower tax rates for Saudi Aramco.
The revised fiscal regime should incentivise more aggressive exploration and development drilling in the kingdom, according to the oil and gas consultancy firm.
Rystad Energy’s annual review provides a consistent split of recoverable oil resources into proved, probable and expected reserves, as well as contingent and prospective recoverable resources.
‘Proved reserves’ refer to a conservative statistical estimate of oil from fields and wells already sanctioned by oil companies and approved by governments. ‘Contingent resources’ encompass recoverable oil in unsanctioned projects, whereas ‘prospective resources’ are risked estimates from undiscovered fields.
In the US, unconventional shale oil makes up more than 50% of the country’s total recoverable oil resources, which currently stand at 263bn barrels.
Texas alone accounts for more than 80bn barrels of recoverable oil. Of these volumes, 90% is located in shale formations, with the revitalized Permian basin laying claim to more than 50bn barrels.
In the US, oil companies can typically ‘prove’ less than 15% of their recoverable oil, since reserves may be reported as proved only after several wells have been drilled on corresponding unconventional acreage.
However, if natural gas liquids (NGLs) were included in the review, the US would surpass Saudi Arabia by more than 50bn barrels of recoverable oil and petroleum liquids.
While ExxonMobil reports proved oil reserves of 9bn barrels to the US Securities and Exchange Commission (SEC) – or about 25% of its estimated recoverable oil – Rystad Energy finds that Saudi Arabia can prove more than 30% of its recoverable oil even when applying strict SEC regulations.
“We are halfway in the buildup phase for US shale. We will see a new upcycle in the E&P business once US shale reaches this potential. Oil demand will also remain surprisingly robust over the next decade, despite new innovations to meet growing demand for individual transport in the Western Hemisphere,” Per Magnus Nysveen, head of Analysis at Rystad Energy, comments on the report’s findings.
Rystad Energy applies Society of Petroleum Engineers (SPE) standards when assessing reserves and resources. As such, the reserves comparison are standardised across the world, attaining consistency between OPEC and non-OPEC countries, as well as between conventional and unconventional assets.
Rystad Energy estimates total global oil recoverable oil resources at 2.2tn barrels, or 73 times the current annual production rate. For comparison, cumulative global oil production up to 2017 stood at 1,350 barrels.
Unconventional oil recovery accounts for 30% of global recoverable oil resources, while offshore accounts for 33% of the total. As much as 40% of the recoverable oil requires oil prices higher than $80 per barrel to become profitable for the oil companies.
