Majors Unlock More Stranded Resources, but Decarbonization Grows
Industry analyst Wood Mackenzie has highlighted technology as a key shift in resource capture strategies to unlock more from existing fields.
Advancing technology – seismic, data analytics, machine learning, AI, cloud computing – is changing the industry’s understanding of the resource base. The majors have managed to unlock 19 billion barrels of conventional and tight oil resource from within their portfolio since the oil price downturn, accounting for a third of all reserves added then.
Research director Andrew Harwood says: “We have seen this approach bear fruit in Asia Pacific, with Woodside recently upgrading resources at its Scarborough project by 52 percent through the application of new seismic techniques and processing.
“Given the maturity of much of the existing resource base in Asia Pacific, new approaches to improving recovery could prove an effective means of boosting the supply outlook. Just a five percent increase in recovery from producing assets in Asia could add another five billion boe of resource – equivalent to the volume of exploration-led resources added in Asia Pacific over the last three years.”
However, many of the largest stranded assets across Asia Pacific are non-commercial due to high levels of carbon dioxide and other contaminants and may never be developed.
Energy demand in the region is expected to grow 15 percent from 2019 to 6,800 million tons of oil equivalent in 2040. Currently, net fossil fuel imports account for 25 percent of the region’s demand. Despite ambitious government targets, national oil and gas companies have been struggling to ramp up oil and gas production.
Wood Mackenzie Asia Pacific Vice Chair, Gavin Thompson, said: “The situation is set to change as the region grapples with severe air pollution and the demands of energy transition. The question is how can Asia Pacific ensure stable energy supply growth and yet be on track on the decarbonization bill?”
Recent research by Wood Mackenzie indicates that Asia Pacific’s decarbonization bill could hit $3.5 trillion by 2040. This includes investments in solar, wind, hydrogen, nuclear and hydro power between now and 2040, under Wood Mackenzie’s accelerated transition scenario.
“Go electric” is an emerging theme across Asia, and electricity is increasingly set to come from solar and wind. This means less direct combustion of fossil fuels and improving energy security and lowering carbon emissions as a result.
The region currently has 540GW installed capacity for solar and wind and is expected to add 1,528GW over the next two decades. This makes Asia Pacific the largest market for new solar and wind installations in the world by 2040. Wood Mackenzie expects the levelized cost of solar, wind and storage projects to decline more than three percent annually over the next decade thereby further improving its competitiveness compared to conventional technologies.