Rystad: $230 billion in oil projects mothballed because of cheap crude

HOUSTON — Since the oil downturn began, drillers have mothballed $230 billion in projects that have been explored but not yet approved, delaying daily production of 3 million barrels over the next decade, Rystad Energy said in a new report Thursday.

That’s 38 percent higher than Rystad’s previous estimate last July, and the number of projects that have been delayed since then has risen from 40 to 63. Oil sands facilities, heavy oil projects, liquefied natural gas ventures and deep-water prospects were hit hardest before last summer, while more offshore gas production and onshore projects were canceled in the second half of last year.

“During the second half of 2015, E&P companies eager to highlight their cost-cutting cred found easy targets in the smaller, simpler projects in their portfolio,” Rystad senior analyst Readul Islam wrote in the report.

So far, the industry has deferred 14 deep-water projects, five liquefied natural gas projects, two heavy oil facilities, seven offshore gas and 10 oil sands projects, Rystad said. Because the industry cut less complex, less pricey plans in the second half of the year, the deferred oil and gas reserves increased by only 30 percent, while the number of projects delayed rose by 58 percent.

“Risky exploration spending has been called off; incremental developments such as infill drilling at already producing projects have faced higher hurdles for approval,” Islam wrote. “However, post-appraisal pre-sanction projects have borne the brunt of the bloodletting.”