O&G exploration is back, deepwater attracting most attention, report says

Oil and gas exploration is back and deepwater sweet spots are attracting the most attention, energy intelligence group Wood Mackenzie’s industry survey has shown.

Illustration: A semi-submersible drilling rig and a supply vessel / Image source: Pexels
Illustration: A semi-submersible drilling rig and a supply vessel / Image source: Pexels

According to Wood Mackenzie’s eleventh yearly oil and gas exploration survey, in which 259 senior energy leaders took part, the exploration industry optimism is back, profits have returned and the prospects look good.

Dr. Andrew Latham, Wood Mackenzie’s vice president, exploration said: “We’re seeing a continued recovery in the exploration sector, and this borne out by the drilling plans and new licenses we’re seeing.

He said that, according to the survey, conventional exploration is still viewed as the primary resource replacement option. The survey also showed that lower costs, both for exploration and development, are key to exploration’s return to value creation.

Wood Mackenzie said that high-quality prospects in deepwater sweet spots, such as Brazil, Guyana, the Gulf of Mexico and the East Mediterranean, are attracting the most attention. Just in Guyana, Exxon has made thirteen oil and gas discoveries since 2015, and has ordered two FPSOs for the development of Liza discovery.  ExxonMobil is also evaluating plans to add another exploration drillship, which would be Exxon’s fourth drillship in Guyana focused on exploration works.

According to Wood Mackenzie’s exploration survey, the global exploration budget will total about $40 billion in 2019, half of which will be spent on drilling, while 25% is earmarked for geological and geophysical surveys.

Digitalization spend set to increase

Also, Wood Mackenzie says that digitalization today accounts for about 8% of the total spend, but this will increase as new seismic processing techniques, machine learning and AI become fundamental tools for explorers.

Dr. Latham said: “Digitalisation offers exploration the possibility of better resolution of the subsurface, better seismic modeling and growing use of automated interpretation.

He added: “Digitalisation has become a consistent feature on our surveys. The survey results back up our expectation that the exploration industry, led by the majors, will spend billions each year on digitalization.”

Dr. Latham said that efficiency gains – hard-won during the downturn – mean that doing more with less is now standard. And while there is more investment in the exploration pipeline, that cash goes farther than before. According to our survey, the industry is confident that it can break even with an average oil price of around $50 per barrel.

Around 22% of the survey respondents believe that exploration can break even with Brent in a $55- $60/bbl band, while a further 18% are comfortable in the $45-$50/bbl range.

Four years ago, Woodmac says, before the oil price crash, companies were looking at a break-even price of around $80/bbl. According to survey respondents, exploration’s economics have been improved by the move towards less project complexity. Explorers are looking at prospects in less challenging basins, and as Dr. Latham noted, this not only cuts costs, it helps improve drilling time – in some cases by as much as 30% – and allows for quicker project development.

About 36% of those surveyed said they would be investing more on exploration this year, while only 13% had reduced their budgets from last year. An even greater number (38%) said they planned to drill more wells this year while just 10% of respondents expect their well count to be lower than in 2018.


Spotted a typo? Have something more to add to the story? Maybe a nice photo? Contact our editorial team via email.

Offshore Energy Today, established in 2010, is read by over 10,000 industry professionals daily. We had nearly 9 million page views in 2018, with 2.4 million new users. This makes us one of the world’s most attractive online platforms in the space of offshore oil and gas and allows our partners to get maximum exposure for their online campaigns. 

If you’re interested in showcasing your company, product or technology on Offshore Energy Today contact our marketing manager Mirza Duran for advertising options.

Share this article

Follow Offshore Energy Today

Posted on May 13, 2019 with tags .

Events>

<< May 2019 >>
MTWTFSS
29 30 1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 31 1 2

08th OIL & GAS AFRICA 2019 CONFERENCE

OIL & GAS AFRICA is one of the most prime regional & international Oil and Gas conferences in East Africa…

read more >

FPSO Brazil Congress 2019

Charging ahead with 24 planned orders by 2022, Brazil has once again solidified its status as one of the world’s foremost oil and gas leaders…

read more >

OWI WA 2019

West Africa’s only dedicated Offshore Well Intervention Conference is returning for its second year…

read more >

OIL & GAS PHILIPPINES 2019

Oil & Gas Philippines event display products like Oil & gas, fire protection systems and materials…

read more >

Jobs>

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply

Looking to fill a job opening?

By advertising your job here, on the homepage of OffshoreEnergyToday.com, you'll reach countless professionals in the sector. For more information, click below...

apply