Oil production has begun falling at all of the major Western oil companies, and they are finding it harder than ever to find new prospects even though they are awash in profits and eager to expand.
Part of the reason is political. From the Caspian Sea to South America, Western oil companies are being squeezed out of resource-rich provinces. They are being forced to renegotiate contracts on less-favorable terms and are fighting losing battles with assertive state-owned oil companies.
The reality, experts say, is that the oil giants that once dominated the global market have lost much of their influence — and with it, their ability to increase supplies.
“This is an industry in crisis,” said Amy Myers Jaffe, the associate director of Rice University’s energy program in Houston. “It’s a crisis of leadership, a crisis of strategy and a crisis of what the future looks like for the supermajors,” a term often applied to the biggest oil companies. “They are like a deer caught in headlights. They know they have to move, but they can’t decide where to go.”
Along with mature fields, the companies have contracts with producing countries whose governments allocate fewer barrels to oil companies as prices rise.
“It has become really, really difficult to grow production,” said Paul Horsnell, an analyst at Barclays Capital. “International companies have a portfolio of assets in areas of significant decline and no frontier discoveries to make up for that.”
Enter the US government’s increasing interest with expanding it’s oil exploration in Alaska. Details of current drilling plans and their EIAs can be found at the Arctic Field Office, which is a part of the Bureau of Land Management (Department of the Interior). The Arctic Field Office administers what is known as the National Petroleum Reserve-Alaska (NPR-A). Most of the land they look to drill into is owned by the US government or the Bureau of Land Management.
Thus far the Arctic National Wildlife Refuge has been protected from major oil exploration. However the Department of Interior is increasingly opening up previously-protected areas to leasing for oil & gas exploration. They have only recently made another Record of Decision which as their headline says is a ‘major lease sale’ in the NPR-A.
The UK government is also pushing quietly but controversially to have some of their small island territories surrounding sea zones expanded in area so they can take advantage of greater exploration. This sort of behaviour from ‘western’ countries will become more common as their oil companies lose influence within current oil states. And they will only pay lip service to EIAs … if at all.