CERA-IHS: Worldwide oil field decline rate at 4.5%/year

The aggregate global decline rate for producing oil fields is 4.5%/year rather than the 8%/year sometimes cited in other studies, CERA and IHS Inc. reported.

By OGJ editors
HOUSTON, Jan. 17 -- The aggregate global decline rate for producing oil fields is 4.5%/year rather than the 8%/year sometimes cited in other studies, Cambridge Energy Research Associates (CERA) and IHS Inc. said in a report entitled "Finding the Critical Numbers."

The CERA-IHS analysis was based on production characteristics of 811 oil fields that account for about two thirds of current global production and half of the total estimated proved and probable conventional oil reserves base. The report was released Jan. 17.

Annual field decline rates are not increasing with time, said Peter M. Jackson, CERA oil industry activity director and report author. This finding "provides the basis for more confidence about the future availability of oil," he said.

"Decline rates are a function of reservoir physics and investment strategies," Jackson said. "There is a general historical trend toward lower decline rates in recent years, which may be due to better reservoir management practices and the impact of new technology. In addition, because reservoir physics is only one of the key drivers, we would not expect to see a very rapid change in average decline rates in the future without a step change in technology or field development strategies."

Field life cycles
CERA analyzed oil fields during the production build-up, plateau, and decline stages. Its findings include:

-- Only 41% of production is from fields in the database that are beyond the plateau stage and into the decline phase of their production lives.

-- Annual field decline rates are not increasing. As a result of increased investment, improved planning, and technology, production can be maintained at low decline rates in many fields for prolonged periods. Field life is often longer than originally forecast.

-- Individual offshore fields are declining at a 10%/year rate compared with 6%/year for onshore fields. Deepwater fields decline at 18%/year compared with 10%/year for shallow-water fields. Offshore fields held by production outside the Organization of Petroleum Exporting Countries decline 5%/year compared with 12%/year for offshore fields belonging to OPEC members.

CERA said the study reinforced its global liquids capacity model showing that liquids capacity of about 91 million b/d in 2007 could climb to 112 million b/d by 2017.

"This outlook is supported by a key conclusion of this study: There is no evidence that oil field decline rates will increase suddenly," Jackson said. "It is important, though, to continue to research and understand evolving decline trends."

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