According to the International Energy Agency (IEA), some long-held tenets of the energy sector are being rewritten, with the forecast activity set to keep the E&P business busy for decades.

The IEA’s annual World Energy Outlook is a worthwhile read when considering the future’s “big picture” as we near the start of a new year. But to put it bluntly, the IEA’s outlook is not telling us much we didn’t already know.

For example, the report tells us that OPEC and the Middle East will remain critical in the long term for the supply of low-cost oil. And over the next 10 years, Brazil and the US will mostly be responsible for temporarily reducing OPEC’s contribution. Demand, meanwhile, will continue to be dominated by growth from China and India.

This is not exactly shocking news. But some of the figures within the outlook do give good insight into what may lie around the corner for us.

Estimates for ultimately recoverable oil resources are increasing thanks to improving technology. The latest IEA figures for remaining recoverable resources are 2,670 Bbbl for conventional oil (including NGL), 345 Bbbl of tight oil, 1,880 Bbbl of extra-heavy oil and bitumen, and 1,070 Bbbl of kerogen oil.

Oil supply is forecast to rise from 89 MMb/d last year to 101 MMb/d in 2035, including a rise in unconventional oil (up 10 MMb/d) and NGL linked to the increase in gas output (up 5 MMb/d). Conventional oil’s share of total crude production falls from 80% in 2012 to two-thirds by 2035, the report said.

The IEA also estimates that the observed decline rate for conventional fields past their peak will be around 6% per year.

The above stats are a good indicator of where much opportunity lies, with declining output from fields being a major driver for investment. Total spending in the upstream sector is expected to rise to more than US $700 billion this year alone, the IEA said, representing a new record.

I recently heard George Kirkland, Chevron’s vice chairman and executive vice president of upstream, talk about the industry having to produce oil from increasingly complex resources. He mentioned a mind-boggling figure of between $7 trillion and $10 trillion of additional investments.

Clearly the resources are out there to be found and produced from these increasingly complex projects, driven in turn by technology advances and the oil price.

The IEA stated that although technology and high prices are opening up these resources, it doesn’t mean the world “is on the verge of an era of oil abundance.”

But it does mean we can safely say that there will be an abundance of opportunities for the E&P sector to thrive.

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