Half year discoveries lowest this century, says Rystad Enegry

worksite ltd kw9LLON5lO8 unsplashRystad Energy has revealed that, in the first half of 2020, the global discovery of conventional resource volumes reached only 4.9 billion barrels of oil equivalent (boe) – the weakest performing first half of the 21st century

The resource volumes were 42 per cent lower and the number of discoveries was down by 31 per cent compared to the same period in 2019.

The average monthly volumes discovered so far this year are estimated at 810mn boe, down 34 per cent from last year's same period. This year could be on track to repeat the predominance of gas discoveries in 2019, with 55 per cent of the discovered volumes being categorised as gas to date. The top five biggest discoveries represent about 68 per cent of the total volumes discovered.

The monthly average was largely pulled down by June, which saw only three small onshore discoveries, adding about 16mn of boe in discovered volumes. January and May were the most successful months at 1H20 because of major discoveries like Jebel Ali in the UAE, Maka Central in Suriname, Uaru in Guyana and 75 Let Pobedy in Russia.

“Last year we saw the highest volumes of discovered resources since the last downturn. Based on the large number of high-impact exploration wells planned for this year, 2020 was meant to follow the same path. But then COVID-19 struck and the oil market crashed in the Q1 2020, resulting in delays and cancellations as operators cut budgets,” said Rystad Energy’s upstream analyst Taiyab Zain Shariff.

Russia, South America and the Middle East represent about 73 per cent of the total resources discovered so far in 2020. This time, Africa and Australia appear to have taken up a back seat, with less than one per cent of the total resources discovered. It is also interesting to note that nearly 70 per cent offshore resources have been discovered.

In the first half of 2020 there were a total of 49 conventional oil and gas discoveries, of which 27 were announced during the period of global lockdown and travel restriction.

While these travel bans and the associated logistical issues didn’t have much of an effect on projects in the testing and completion phase, they did cause delays for projects in the initial and ongoing drilling phase that required crew changes. This could be one of the reasons for the lower number of discoveries in May and June.

A total of 14 high-impact wells (HIWs) have been completed so far this year. Of these, three have resulted in medium-sized to large discoveries, nine were dry or had uncommercial hydrocarbon shows, while results are still pending for the remaining two. It is estimated that the wells that have come up dry targeted cumulative estimated pre-drill resources of more than 2.5bn boe.

Drilling was in progress on an additional four high-impact wells as we passed the half-year mark, though the SAX01 well on BP’s Shafag-Asiman block in Azerbaijan has been temporarily suspended due to the COVID-19 travel bans. Another 11 high-impact wells are expected to be drilled before the end of 2020, including major wells in the Suriname-Guyana basin, Southern Africa, Timor-Leste, Norway and the frontier areas of Russia.

“Although we look forward to these wells being spudded before the end of this year, a few delays may still arise because of COVID-19-related logistical issues that may come up as a result of the expected second wave of the pandemic,” added Shariff.

The high impact wells in-progress and planned have the potential to add up to five billion boe to the global tally. But with the unpredictable oil markets and budget cuts from operators on top of the logistical issues associated with COVID-19, oil and gas exploration faces major challenges.

It is estimated that this year's global offshore exploration activity could be reaching its lowest point in 20 years, with discovered volumes falling even lower than in 2016.

Alain Charles Publishing, University House, 11-13 Lower Grosvenor Place, London, SW1W 0EX, UK
T: +44 20 7834 7676, F: +44 20 7973 0076, W: www.alaincharles.com

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