Oil and natural gas startups worldwide should continue to deteriorate this year, resulting in an even bigger call on U.S. shale to meet global demand growth over the next decade, a review by Raymond James & Associates Inc. has found.

Oil production capacity beyond the United States and for members of the Organization of the Petroleum Exporting Countries (OPEC) likely will be in decline or at best flattish to at least 2020, said analyst Pavel Molchanov Monday.

Startups should begin to pick up in 2019, but “the picture for 2020 and beyond remains hazy, reflecting uncertainty over not just the pace of project approvals but also construction timetables.”

The spending dislocation that began in late 2014 has manifested itself most visibly in regions where short-cycle oilfield activity dominates, including the United States, China and Colombia. Meanwhile, long lead-time projects, mostly in the offshore of Brazil, the North Sea and Africa, have seen final investment decisions (FID) delayed and in some cases canceled.

Less than a year into the downturn, Raymond James analysts in August 2015 estimated that more than 5.0 million b/d of oil projects had been delayed/canceled. Since then, it has become apparent that the pace of project startups will average much lower in the next five years than in the past five, Molchanov said.

“The dearth of new startups adds to our view that non-OPEC, ex-U.S. supply is likely to deteriorate over time, resulting in an even larger ‘call’ on U.S. shale in order to meet growth in global demand over the next decade,” he said.

Raymond James now estimates there will be 1.5 million b/d per year of production capacity growth for 2017-2020, versus 2.2 million b/d per year growth in 2015-2016. Analysts compiled a list of oil development projects that started up in 2015/2016, along with pre-production projects that are scheduled to come online in 2017-2020 and beyond.

The specific criteria used in the compilation are for upstream oil projects with capacity of at least 10,000 b/d; 24 months at a minimum of construction development activity; and (3) projects are oil-centric rather than natural gas-centric, with no liquefied natural gas projects.

“The list comes to more than 150 projects located in a diverse range of geographies across every continent,” Molchanov said. “Most of the projects are in the greenfield category, but some are expansions of existing (already producing) projects.”

The analysis determined that in none of the next four years, from 2017 to 2020, will there be as many production startups as in 2015 or 2016. The amount of capacity that started up over 2015 and 2016 was 4.4 million b/d, or 2.2 million b/d per year.

Between 2017 and 2020, an estimated 5.9 million b/d, or 1.5 million b/d per year is now scheduled to ramp up. But that’s a best-case scenario, Molchanov said. There obviously could be delays because of price-related or operational issues. On a risked basis, a “more realistic” figure through 2020 is 4.5-5 million b/d, or 1.2 million b/d per year.

The cyclical trough in startups should occur in 2018, as many of the projects that started up in 2015 and 2016 were legacy FID projects that dated back before the downturn. The industry was so flush with cash in the boom years, particularly in 2012 and 2013, that FIDs flowed. And once construction has begun, projects almost always move to completion, regardless of the commodity landscape.

“This is the last year with a meaningful number of project startups whose FIDs occurred before the downcycle, and the first year with some ‘next-generation’ (post-meltdown) startups,” Molchanov said. “Based on our survey, 2018 will be the trough year, i.e. the year with the

lowest amount of new capacity coming online. This is intuitive considering the fact that many 2018 startups would have had to reach FID in 2015, a year that ended up being chock-full of delays and cancellations.”

Most of the projects slated to come online post 2020 haven’t yet reached FID, but those also may be subject to operational delays. For example, Chevron Corp.’s Tengiz expansion in Kazakhstan is planned to begin operations in 2022; it was approved in July 2016. BP plc’s Mad Dog Phase 2 in the Gulf of Mexico is scheduled to ramp in 2021; it was approved in December.