High impact exploration has weathered a perfect storm of a pandemic, an oil price crash and an accelerating energy transition, and enters the new year with a substantial drilling programme that should at least match 2020, says Graeme Bagley, Head of Global Exploration & Appraisal at Westwood Global Energy Group.
According to Mr Bagley, high-impact exploration started well in 2020 with the first quarter seeing the highest number of wells completed since Q4 2014 and commercial success rates above 30 per cent, yet that was not to last.
“The world changed in Q2 with the COVID-19 pandemic taking hold, seeing oil prices crash and exploration budgets slashed. The impact of the pandemic became apparent in Q3 2020, with just seven high impact wells completed, the lowest quarterly figure since Westwood’s records began in 2008,” he detailed.
How did high-impact exploration fare in 2020?
Mr Bagley highlighted that 2020 came to an end with 72 high impact wells completed, down from 99 in 2019, but at a similar level to that seen between 2016 and 2018.
Westwood estimates that approximately 17 billion barrel of oil equivalent (boe) was discovered from high impact exploration in 2020, down slightly from 2019 but still more than 2017 and 2018 combined.
Discovered oil volumes were the highest seen in the last five years (6.8 billion barrel of oil (bbl)) with 10 billion boe of gas also discovered. Commercial success rates remained above 30 per cent, more than double that of 2016.
The three largest discoveries of the year were all claimed by Rosneft in the Kara Sea and West Siberia, with Russia accounting for about 70 per cent of the discovered volume, up from roughly 10-30 per cent in 2017-2019 based on the figures reported by Rosneft.
Figure 1: high impact exploration discovered resource and commercial success rates, 2016-2020. Figure 2: number of high impact discoveries, 2016-2020 Source: Westwood Wildcat.
What can the industry look forward to in 2021?
Current projections for 2021 suggest that activity should at least match the 70 wells in 2020 with the potential to be higher and up to 100.
Mr Bagley notes that drilling plans are still fluid and will firm up in Q1.
“Exploration hot spots for 2021 are mainly in the Americas, particularly offshore Mexico, the Suriname-Guyana Basin and offshore Brazil. Africa is expected to have another quiet year, with only a handful of high-impact wells being drilled, however, this does include the much anticipated multi-billion barrel Venus prospect in Namibia,” he said.
“Northwest Europe should see 10-15 high-impact wells drilled which is a similar number to 2020.”
Mr Bagley outlined than an estimated approximately 26 billion boe is being tested by 76 wells that are considered ‘probable’ in 2021, weighted 75:25 oil to gas.
“This drops to about 8 billion boe split 65:35 oil to gas when the chance of success is considered, reflecting the higher risk nature of some of the oil prospects being targeted. As in previous years, additional discoveries may be announced in countries where drilling plans are less transparent, especially in Russia and the Middle East,” he shared.
Graeme Bagley’s full article 2020 High Impact Exploration and 2021 Key Wells to Watch can be found online here.
Further information on Westwood’s Key Wells to Watch is available in the report published in December 2020.
