The oil and gas industry is spending about $500 billion a year just to maintain consistent production from existing wells, a new International Energy Agency report found, as global fossil fuel reserves run down more quickly than previously expected.
The report found that 90% of the industry’s annual capital spending on drilling since 2019 “has been dedicated to offsetting production declines rather than to meet demand growth.” That trend can be largely attributed to the industry’s increasing reliance on fracking for shale oil and gas, which demands ongoing spending to remain operational.
The report cautions that less investment may be needed in the future as oil and gas demand declines, and the IEA has repeatedly warned that the global economy is moving toward an oversupply of fossil fuels. But for now, the report indicates, oil and gas companies need more capital just to keep up — a message that will likely be welcomed by the industry’s advocates.