Wood Mackenzie reports why new oil fields could outperform old ones in emissions and value

Leading international energy analyst Wood Mackenzie says investment in petroleum exploration has plummeted just when high-impact oil and gas exploration could cut global Scope 1 and 2 emissions by 6% between now and 2030.

According to Wood Mackenzie’s latest Horizons report, despite investment in oil and gas exploration falling by two-thirds in the last decade, the industry still has a critical role to play in decarbonisation efforts and providing advantaged barrels during the energy transition.

The report states that the world has plenty of current resources to meet demand, with approximately 3 trillion barrels of oil equivalent (boe) inventory.

Cleaner emissions

Wood Mackenzie suggests that, thanks to modern decarbonisation technologies and higher facilities throughput, finding new fields may be preferable to cleaning up old ones if we want to achieve lower Scope 1 and 2 carbon dioxide (CO2) emissions.

“It’s important to point out that newly discovered fields would not increase demand, as demand neither grows when exploration succeeds nor shrinks when it fails,” said senior vice president of energy research, Andrew Latham.

“As demand is proving resilient, investment in new supply is needed to displace dirtier alternatives.”

Reduced CO2

Wood Mackenzie argues that new fields about to begin production from 2025 to 2030 will average Scope 1 and 2 emissions intensity of 17 kilograms CO2 equivalent per boe, compared with 28kg for existing supply from mature fields.

“Exploration through the current decade is on track to provide 12% of global oil and gas supply,” Mr Latham said.

“If we assume that these new fields displace existing supply options with emissions intensity typical of older fields, then global Scope 1 and 2 emissions in 2030 would be cut by around 6%.”

“Exploration has been the most economic means of rejuvenating a portfolio with new fields, particularly for companies that seek advantaged resources—those that are low carbon and high value.”

“Such prized assets are difficult to buy at a good price; it’s much better to discover them.”