Despite unconventional oil and gas reserves becoming a hotter topic globally as nations jump on the US-led shale-gas boom, traditional oil and gas development still offers plenty of opportunity. Worldwide, there are nearly 1.4 trillion barrels of oil equivalent (BOE) of reserves in conventional undeveloped oil and gas fields, according to an upstream outlook released by analysts Wood Mac kenzie, with the Middle East, Latin America, and North America holding the most value for potential investors.

This figure includes nearly 1.1 trillion BOE of technical reserves, or reserves for which there are no firm development plans in place, Wood Mackenzie said.

Over half of these discoveries, which we classify as 'good technicals,' are potentially economic under our current price assumptions,” said David Highton, principal analyst, upstream research, Wood Mackenzie. “These have an indicative collective value of circa US$760 [billion].”

The region with the most valuable portfolio of good technicals is the Middle East, followed closely by Latin America and North America.

The massive undeveloped resources of the Middle East (367 billion BOE) lead the way. These include the undeveloped volumes in the super-giant North/South Pars gas field, which extends between Qatar and Iran in the Persian Gulf,” Highton said. “Combining both countries' share, this is the largest single technical reserve in the world.”

Regions with the largest volumes of good technicals are often those where access is difficult or impossible for international oil companies, such as parts of the Middle East, Russia, or Latin America, Highton said.

There are also some 300 billion BOE of undeveloped commercial reserves that should be brought onstream in “the next 10 years or so,” according to Wood Mackenzie analysts.

Looking at hydrocarbon type, Wood Mackenzie said undeveloped commercial reserves are weighted toward gas (60:40), while technical reserves comprise slightly more liquids (55:45).

Significant regional variations exist, however—Asia-Pacific is gas dominated (85%) due to the huge gas discoveries offshore Australia and elsewhere, while both North and Latin America are oil-dominated (each circa 90%) due to their world-scale undeveloped Canadian and Venezuelan oil sands and heavy oil deposits,” the report said.

Wood Mackenzie noted that commercializing the unfulfilled potential of undeveloped discoveries is not an easy task.

There are a number of obstacles and complexities which continue to hamper efforts to tap into the $760-billion prize,” said Highton. “These could be the lack of accessible markets or available infrastructure, political or environmental issues, operator constraints, or simply low resource volumes for the particular location.”

Technical fields face a range of challenges but are a key component of many company portfolios and a key opportunity set for companies looking to expand, according to the report. “With sustained high oil and gas prices, advances in technology, and stiff competition for quality opportunities, companies are looking to exploit the unfulfilled potential of these undeveloped discoveries.

Today, many obstacles are simply beyond the influence of any one company. It will require investment, technical expertise, patience and diligence, by companies of all sizes, to overcome the challenges.”

–Steve Hamlen

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