The world’s demand for energy in general and petroleum in particular is relentless. Even with demand in OECD countries essentially flat, there is a fairly broad consensus that world oil demand will grow at about 1.5% per year in the foreseeable future. Even at this historically low rate of growth, the world will need 30% more oil in 20 years than it needs now.

The easy oil is gone. Oil companies will need to explore increasingly remote locations such as deep water and deploy increasingly sophisticated technologies to meet those needs. In the past several years, at least in the US, the vast majority of growth in oil supplies has come from increased unconventional production of oil and gas.

But what about looking for oil in places where you have already found it? An often overlooked source of “new” oil is mature fields. The average worldwide recovery factor for gas is 70%, while for oil it is only 35%. Given the vast reserves remaining in these existing fields, every percentage point increase in recovery could generate a two-year global supply of hydrocarbon.

The economics of mature fields are compelling and in many ways analogous to unconventional resources: Paybacks can be extremely short; the variable cost and scale of interventions creates a lot of flexibility; and mature field interventions can be implemented quickly, bringing “new” oil to market. In terms of risk, reward, and flexibility it is quite a value proposition.

The optionality inherent in mature fields makes them especially attractive. In a world where oil prices fluctuate rapidly, putting barrels in the tank quickly and bringing them to market when prices spike is at a premium. When prices do spike, the capacity to identify and implement mature field interventions quickly often makes the cost of those interventions less relevant.

Even so, the payback on many mature field projects can be extremely short and profitable. Stimulation techniques such as acidizing and fracturing, installation or modification of artificial lift techniques, and location of overlooked pay zones that lead to recompletion into new zones often pay back their investment within one year.

Like unconventionals, mature field projects also offer the opportunity to manage performance risk on a relatively small scale. Deepwater projects have budgets in the hundreds of millions of dollars, and only the largest operators can build a diversified portfolio. In contrast, mature field interventions give operators the opportunity to make relatively small incremental investments.

Well interventions have some mechanical risk due to the age of the wellbores and the length of time the downhole tubing and packers have been installed. This risk is usually tied to extended “fishing” jobs to retrieve and clean the wellbore so other zones can be tested, stimulated, or have new or revised artificial lift techniques installed. These investments, in the aggregate, provide a relatively certain (and rapid) cash return. Mature fields also offer a relatively low level of reservoir risk and the ability to manage those risks on a small scale. There is some geological and reservoir risk because the target zone may have been previously drained by other completions or the zone may be too marginal to produce commercially, but the fact that the industry has experience working in a reservoir improves the odds that it will be able to produce more oil. Again, the scale of these projects makes it possible for an operator of any size to put together a diversified portfolio. With operators facing increased pressure to put barrels in the tank, the mature field value proposition is compelling and represents an essential piece of the oil and gas puzzle.

Given the vast reserves remaining in these existing fields, every percentage point increase in recovery could generate a two-year global supply of hydrocarbon.