Report: Oil industry may waste $1.1 trillion on expensive exploration

The oil industry could waste up to $1.1 trillion in the next decade on unnecessarily expensive drilling projects, such as those in the Arctic and deep water, according to a new study.

That’s the total that oil explorers would have to spend through 2025 on projects that would require oil prices of at least $95 a barrel just to break even, Bloomberg News reported, citing a study by the Carbon Tracker Initiative.

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Oil companies do not need to spend that money, because the amount of oil that the world could consume without warming the planet to dangerous levels is available from less expensive places that can be developed for $75 a barrel, the study said.

Carbon Tracker estimated that Brazil-based Petroleo Brasileiro would spend up to $83 billion through 2025 on the oil drilling that costs $95 a barrel. ExxonMobil Corp.’s spending on the expensive deposits could reach $73 million and Russia-based Rosneft could pay up to $70 billion.

“Investors should require the majors to demonstrate improved capital discipline, to deliver shareholder value, not just volume of production,” James Leaton, Carbon Tracker’s research director, told Bloomberg.

The uneconomic exploration could reach $21 trillion in value by 2050, Carbon Tracker said.