Thousands of new oil wells and hundreds of new oilfields will be needed to meet global demand even if it falls sharply towards the middle of the century, Oslo-based consultancy Rystad Energy said last Friday.
Its analysis stands in sharp contrast to the conclusions of the International Energy Agency (IEA), which said [in May] that investors should not fund new oil, gas, and coal projects if the world wants to reach net-zero emissions by mid-century.
The IEA's scenario sees oil demand declining to 24 million barrels per day (bpd) by 2050, while Rystad sees oil demand falling to 36 million bpd by the same time.
"Given that output from oil wells declines by an average of more than 20% per year, the international oil industry will still need to drill thousands of new wells in existing fields, as well as developing around 900 new oilfields with collective resources of about 150 billion barrels of oil," the consultancy said in a note.
Most of these projects were expected to be redevelopment, extensions, or tie-backs to existing platforms, meaning the required investments will be moderate as existing infrastructure is reused, it added.
Rystad said developments were needed to deliver about 10 million bpd in the 2030s, as it saw a slower fall in demand than the IEA, which the consultancy said was overestimating the impact of biofuel growth and behavioral changes.
Even if oil demand remains at 36 million bpd in 2050, it should be possible to reach the target of limiting the temperature rise to 1.5 degrees Celsius compared to pre-industrial times, it added.
Rystad's analysis is likely to be welcomed by oil companies and oil-producing countries, such as Norway, which have questioned the IEA's analysis as it undermines the case for the industry to carry on producing oil in the medium term.
The Organization of the Petroleum Exporting Countries (OPEC) has said a lack of investments in new projects could lead to more volatile prices
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