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Oil prices are down, and so is exploring for oil

Oil wells pump the oil fields of California's southern Central Valley.  David McNew/Getty Images

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Global oil discoveries in 2015 cratered to a 70-year low. Drillers found 2.7 billion barrels of crude, the lowest amount since 1947, according energy consultancy Wood Mackenzie. 

Low oil prices mean companies can only afford to drill half the exploratory wells they normally do.

“The dip we’re seeing in exploration activity, the dip that we’re seeing in discovered volumes, that will come home to roost in a decade,” said Julie Wilson, director of global exploration research at Wood Mackenzie.

Ten or 12 years is how long it takes for an oil company to find and drill and deliver petroleum from a big field. The thing is, the world’s demand for oil by then will likely be higher than it is today, even assuming today’s climate change pledges cut fossil fuel use. And any oil shortage would push oil and gasoline prices up.

Skimpy discoveries aren’t just the result of tight-fisted oil companies. The firms’ drilling success rate is also down.

“You could argue that the industry is not doing something correctly at the moment,” said Nils-Henrik Bjurstrom, head of global exploration analysis at energy consultancy Rystad Energy in Norway.

As bad as exploration and discoveries went last year, many projections for this year are even lower.

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