Caspian Energy Journal Caspian European Club
Friday, 29 September 2017 11:00

WoodMac forecasts stable non-OPEC decline rates through 2020

Decline rates among countries that aren’t members of the Organization of Petroleum Exporting Countries have held steady at around 5% since 2015, and Wood Mackenzie Ltd. expects them to remain at that level until 2020, Caspian Energy News ( reports with reference to OGJ.

The research and consulting firm’s report—“Non-OPEC Decline Rates: Lower for Longer”—shows that annual decline rates for conventional fields peaked at 7% during the last decade, or 2.4 million b/d/year. However, in 2014, they reached a historical low of just 3.6%, or 1.2 million b/d. The price collapse caused decline rates in 2015 increase to 5.1%, or 1.9 million b/d, on the back of steep spending cuts, and rates have stayed at around that level since.

While some shorter-term measures may relax, longer-term factors, such as increased production from “zero-decline” assets and early-life assets, are expected to help keep decline rates steady. WoodMac’s analysis shows early-life assets increasing their proportion of production from 6% in 2010 to 30% by 2020, offsetting higher declines of more mature assets.

Beyond 2020, WoodMac expects decline rates will return to the historical norm of about 6%, and higher oil prices will be needed to incentivize investment in new production to meet a widening supply gap. Even moderate swings in average annual decline rates can influence the market, as the rate of decline for non-OPEC fields is crucial to the global supply picture. A 1% shift in annual global decline rates could potentially add or remove 2 million b/d by 2021.

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Person in charge of the newsline: Fidan Isayeva

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