Exxon, others leading high-impact drilling rebound

1
90
The headquarters of ExxonMobil is seen in Brussels on Friday, Oct. 26, 2012. Belgian authorities are seeking the publicís help in solving the killing of an executive for ExxonMobil, the world's largest oil company, who was shot to death in front of his wife nearly two weeks ago on a street in a suburb of the Belgian capital of Brussels. Nicholas Mockford, a British national, was shot on Oct. 14 as he left an Italian restaurant in Neder-over-Heembeek. Belgian authorities declined to provide information on the crime, which they said was common in investigations of serious crimes. (AP Photo/Virginia Mayo)

Large oil and gas companies are commanding a greater role in high-impact exploration, but a lack of depth in the quality of global drilling opportunities diminished their performance in 2018, Westwood Global Energy Group reported Friday.

“The competitive landscape is changing with the largest companies like Total, Equinor and Exxon now leading the way on conventional high-impact drilling, which is forecast to increase by 20 percent this year,” Keith Myers, president for research with Westwood Global Energy Group, said in a written statement emailed to Rigzone. “At the same time, mature regions such as North West Europe are seeing a renaissance, as explorers focus on trying to find more hidden gems.”

Westwood’s findings stem from the research, data analytics and consulting services firm’s latest ”State of Exploration” report, which examined global conventional exploration over the past five years and previews prospects for 2019.

According to Westwood, a “twin track strategy” driving the industry comprises:

Increasing short-cycle exploration over the period in mature basins with existing infrastructure

Continuing to hunt for new petroleum provinces, particularly in deep water.

Also, Westwood noted that companies are moving away from sub-Saharan Africa and other onshore frontier drilling opportunities that can take considerable time – in some cases upward of 16 years – to commercialize. Challenges above-ground include lack of infrastructure and political/regulatory hurdles, the consultancy added. Other report findings include:

Compared to the previous year, exploration drilling in 2018 was up nearly 30 percent but yielded poorer performance with fewer big discoveries and a lower commercial success rate.

From 2014 to 2018, high-impact drilling discovered volumes were down 50 percent overall against results from the preceding five-year period.

High-impact drilling should increase 20 percent in 2019 to approximately 80 wells, with more wells planned in maturing and mature plays such as North West Europe and Mexico.

More than 50 percent of high-impact wells for 2018 and more than 70 percent for 2019 involve supermajors; in contrast, the supermajor participation rate for 2015 was 34 percent. “Whilst exploration is recovering, it’s from a very low base,” stated Myers. “There’s an acknowledgement amongst many exploration companies that it may never again reach 2014.”

Myers pointed out the pessimism about duplicating the 2014 peak stems from three main reasons.

“First, the quality of the drilling portfolio globally is declining overall; despite improved drilling numbers there has been a decrease in discovered volumes, average discovery size and success rates,” he said. “Second is the competition from the U.S. onshore for reserves replacement capital. Third is the looming energy transition away from fossil fuels that is starting to impinge on exploration thinking.”

1 COMMENT

LEAVE A REPLY

Please enter your comment!
Please enter your name here