The explorers that usually scrub the earth for oil stayed home last year.
Outside of the U.S. energy boom, the oil industry discovered the least amount of crude in 64 years, as the oil-market crash forced drillers to make deep cuts to exploration budgets, research firm IHS says in a new report.
The group estimates 2.8 billion barrels of oil were discovered last year, the smallest amount on record since the industry began its surge of exploration for oil around the globe after World War II. The decline in discoveries is the culmination of an industry-wide pullback from international waters that began when companies turned their drill bits to shale formations in Texas, North Dakota and Oklahoma.
“We’ve seen four consecutive years of declining oil volumes, which has never happened before,” said Leta Smith, a researcher at IHS Energy, in a written statement.
The shale revolution drew oil producers to North America, away from more expensive and risky investments in international waters. The years of $100 oil made it profitable to develop existing oil fields, and in the downturn, oil exploration was one of the first items to get nixed in corporate budgets.
Companies drilled 4,300 conventional exploration and appraisal wells last year, IHS says, compared to 5,300 in 2012. Oil companies retreated from the ocean depths. Deep-water drilling, defined as drilling in 1,000 to 5,000 feet of water, dropped by 20 percent last year, while drilling in waters more than 5,000 feet deep declined 40 percent.
“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,” Smith said.