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There has been a resurgence in exploration and appraisal
drilling since the beginning of 2021. The number of wells drilled
over the last six months (Figure 1) are comparable to levels last
witnessed when oil was closer to USD 100. Contributory factors
include a stable, reasonably high oil price and the fulfilment of
well commitments delayed by the onset of the coronavirus disease
2019 (COVID-19) pandemic during 2020.
Figure 1: Number of E&A wells over first six months of
each year
Focusing in on the drilling successes for the year; as of 1 July
2021 there had been a total of 82 new discoveries from pure
exploration drilling. The Far East region, thus far, has seen the
most discoveries with a total of 25, yet it contributes only 14% of
recoverable resources discovered globally (Figure 2). In contrast
Latin America has yielded significantly fewer discoveries, but the
region has contributed 30% of discovered volumes in 2021.
Figure 2: NFW number of discoveries v recoverable
MMboe
Of the 38 High Impact Wells (HIWs) we identified at the start of
the year*, there have been a total of 17 HIWs spudded over the
first six months of 2021. Of the 17 wells spudded so far; 5 are in
Frontier North America, 4 in Brazil, 3 in Mexico along with 1 in
Bolivia and 1 in Suriname to round off Latin America, 2 of the
wells are in Norway and 1 is in Turkey. Of the top 10 discoveries
so far in 2021 4 have been discovered with HIWs; the Sakarya North
discovery in Turkey, Urissane in Brazil (2020 spud), Talitha in the
United States and the Shafag and Asiman discovery in Azerbaijan
(2020 spud).
The biggest discovery in 2020 was TPAO's Sakarya gas field in
the Black Sea. So far over the first six months of 2021 the biggest
discovery globally is TPAO's Sakarya North gas field. Both of these
gas discoveries were made with HIWs - Tuna-1 and Amasra-1
respectively. Prior to the drilling and success of Tuna-1 a total
of 18 exploratory wells had been drilled in the deepwater Black
Sea, offshore Turkey, all registering oil and gas shows or dry
holes. These two major discoveries were drilled in the frontier,
western part of deepwater Black Sea, discovering a new play and
plans are now underway to develop the fields. Tuna-1, located at
2,117 m water depth (WD), was reported to have discovered 14.3
trillion cubic feet (Tcf) of gas reserves in Pliocene-Miocene
sediments, whereas Amasra-1, at 1,938 m WD, discovered a further
4.8 Tcf of gas. Sakarya is expected to be developed in three
phases, the first of which includes the installation of a subsea
gas production facility with further associated subsea tie-backs
from both the Sakarya and Sakarya North fields. The second phase
consists of the laying of a 155-km subsea pipeline which is to be
installed at 2.2 km below sea level. This will export the produced
gas to an onshore processing facility which will be built as part
of the third phase of the development project. The initial drilling
phase will include between 6 and 10 deep offshore production wells
aiming to produce up to 0.35 billion cubic feet of gas per day
(bcfg/d). During the second drilling phase, between 30 and 40
further development wells are expected once first gas is achieved.
The project is expected to produce up to 1.4 bcf/d during peak
production. The preliminary development costs are expected to be
around USD 3.2 billion. Gas from the Sakarya field is expected to
be consumed within the domestic Turkish gas market. This would
provide Turkey with increased energy security, reducing any risk
associated with relying on imports from Russia, Azerbaijan, and
Iran as well as LNG imports from Qatar, the United States, Nigeria,
and Algeria. In addition, this project is expected to supply
competitively priced gas to drive down end-user prices. TPAO aims
to achieve first gas in 2023 given the significance of the
discoveries. However, due to the complexities of the deepwater gas
field, the onstream date could be pushed to 2025 and it is deemed
important that TPAO will partner with an IOC to develop the field
which in turn could delay reaching that 2023 goal. Recent reports
suggest a potential partnership with ExxonMobil and/or Chevron.
ExxonMobil has prior experience within the Black Sea with its
Neptun Deep project in Romania.
The second biggest discovery of 2020 was in Brazil with
Petrobras's Aracuaria discovery in the Santos Basin. So far in 2021
the second biggest discovery globally is also in Brazil with
Petrobras's Urissane discovery. Urissane is a discovery in the
external frontier of the Campos Basin, outside of the
"geographical" limit of the pre-salt, although it shares the same
elements of the pre-salt petroleum system. The discovery of gas as
the main hydrocarbon type over oil was slightly disappointing, but
it does confirm the existence of an active petroleum system in the
area. A second HIW, targeting the Mairare prospect, is drilling (as
of early July 2021), targeting an analogue of Urissane in the same
area. If the reservoir conditions are suitable and commercial oil
is confirmed in the outer portion of the Campos Basin, then this
would open a new frontier for development comparable to the Santos
pre-salt. Although less desirable, if gas is discovered rather than
oil, then new development projects are entirely feasible. Block
BM-C-33 partners led by Equinor approved a gas and condensate
development concept during March 2021 that could emerge as a model
for future projects. It requires the installation of a FPSO on the
main Pao de Acucar field, with the capacity of processing 126,000
barrels of condensate a day (bc/d) and up to 565 million cubic feet
of gas (MMcfg/d), with tie-backs to the Seat and Gavea fields. The
produced condensate will be exported via shuttle tanker, while gas
will be exported through a new subsea pipeline to a dedicated
receiving facility at the Petrobras operated Cabiunas terminal in
Macae, Rio de Janeiro. The average gas export volume is expected to
be in the region of 495 MMcf/d (14 MMm3/d) and it is anticipated
that additional new discoveries in the area will prove economically
viable to develop.
As can be seen for 2020 and the first half of 2021 the top two
biggest discoveries globally have resulted from the drilling of
HIWs in deepwater and relatively underexplored areas targeting new
plays. The success of such wells suggests that frontier exploration
is alive and well despite the more conservative attractions of
infrastructure led exploration. The full report details the
remaining planned HIWs slated for the second half of 2021.
