How did global oil and gas exploration fare in 2017? It depends on who you ask.
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| Photo from Maersk Drilling. |
Rystad Energy reported today (21 December) that 2017 was another record low year for discovered conventional oil and gas volumes worldwide, with less than 7 billion boe discovered this year.
“We haven’t seen anything like this since the 1940s,” said Sonia Mlada Passos, senior analyst at Rystad. “The discovered volumes averaged at approximately 550 MMboe per month.”
What’s most worrisome to Passos is that the reserve replacement ratio in 2017 reached 11% for oil and gas combined, compared to more than 50% in 2012. According to Rystad analysis, 2006 was the last year when the reserve replacement ratio hit 100%, mostly due to the giant onshore gas field Galkynysh in Turkmenistan.
Both the total volumes of discovered resources and the resources per discovered field were down this year, Rystad reported. An average offshore discovery in 2017 held around 100MMboe, compared to 150MMboe in 2012.
“Lower resources per discovered field can influence its commerciality,” said Passos. “Under our current base case price scenario, we estimate that over 1 billion boe discovered during 2017 might never be developed.”
Rystad said the low discovered volumes on a global level represent a serious threat to the supply levels a decade down the road.
“Global exploration expenditures have decreased year-over-year for three consecutive years now, falling by over 60% from 2014 to 2017,” Passos said. “We need to see a turnaround in this trend if a significant supply deficit is to be avoided in the future.”
Rystad’s view differs from a report released earlier this week by Westwood Energy. In that report, Westwood pointed out that high impact drilling commercial success rates have remained constant – around the one in four level for the past five years – but in 2017 resources discovered per high impact well drilled grew to 104MMboe from 71 MMboe in 2016. These resources, coupled with a dramatic fall in average well cost to $48 million per well, finding costs declined to $.50/bbl, the lowest since 2011.
Westwood noted that handful of high-impact wells are behind much of the discovered 2017 volumes, including Kosmos' Yakaar gas discovery offshore Senegal; ExxonMobil’s Payara, Snoek, and Turbot discoveries offshore Guyana; and Talos Energy’s Zama-1 discovery offshore Mexico. This view is consistent with that of Rystad, which reported the top three countries in terms of discovered volumes in 2017 are Senegal, Mexico and Guyana.
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