The news media has reports of horizontal wells that sometimes have dramatic initial production rates, but under the radar comes a report recently by Rystad Energy, where on December 21st they say, “Discoveries of new reserves this year were the fewest on record and replaced just 11 percent of what was produced.” The report goes on to examine the declining discovery rate and according to Rystad’s analysis, 2006 was the last year the reserve replacement ratio reached 100%;
This news is unsettling to some because they have been mesmerized by the news of horizontal well success in the US to think we have an abundance of oil, but the truth is the industry is not finding the giant oil reserves needed to replace the oil we are using globally. The oil price will go higher.
We shouldn’t be surprised; Dr. Ken Deffeyes (Princeton) published “Hubbert’s Peak” in 2001 and in that he predicted that post 2005 our major oil field discovery rate would decline and will continue to decline. http://www.princeton.edu/hubbert/
Therein resides the opportunity for investment! We at Ranken Energy have selected an area of Oklahoma where finding costs are low and reserve potential is high. We made a major investment in exploration tools of modern, high effort 3D seismic data plus a comprehensive geologic database and studies we coupled with the seismic data. We drill vertical wells (with an occasional directional component) of less than 8,000’ TD and drill rigs for our depths are readily available.
Using this exploration model over the last 17 years we distributed over $228 million to our working interest partners. And we are ready to drill.