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The year 2020 witnessed several majors announcing plans to
reduce greenfield exploration as they seek to rationalize their
portfolios and transition to alternative energy sources.
Nevertheless, exploration is continuing throughout the globe with
several key wells planned for 2021.
There remains a thirst for exploration across all regions, and
this, coupled with companies focusing on maximizing economic
recovery from their existing assets, points towards this durable
industry rebounding back to the optimism shown just before the
coronavirus disease 2019 (COVID-19) pandemic. However, much
uncertainty remains with regards to the pandemic and in turn when
some normality will resume. The investment decisions to drill some
of these higher risk wells will remain fluid, largely based upon
budget priorities, nevertheless we have adopted a realistic
approach in our outlook as to the timing of these wells going
ahead.
We will be entering 2021 with the oil price at similar levels to
what was seen between 2000 and 2004 as well as the most recent
crash from 2015 to 2017 but during these downturns the industry has
experienced some of its biggest and most important discoveries over
the last two decades.
In the early 2000s we witnessed some huge discoveries across the
CIS region (Yoloten, Kashagan, and Sulige) and the Middle East
(Yadavaran and Ghazal) ,Latin America (Buzios,Mero and pre-salt),
and the same again between 2015 and 2017 with the discovery of Zohr
in Egypt and Liza in Guyana, different regions, similarly impactful
discoveries (Figure 1). Moving into 2021, we will see a mixture of
play openers and also spuds in 'hot areas' of exploration which
could be as impactful as in previous downturns.
Figure 1: Discovered resources and oil price.
IHS Markit estimates a total of 38 High Impact Wells (HIWs)
being drilled in 2021. Latin America is likely to see the most of
any region with exploration continuing in the hot-spots of Guyana
and Suriname and the pre-salt targets offshore Brazil. Further HIWs
can be seen in Central America with HIWs planned in Mexico,
Jamiaca, Honduras and the Bahamas.
In Europe, there are two planned HIWs in the Barents Sea where
the search for a giant discovery continues, and four wells in the
Eastern Med area which has been another region of focus for
exploration with huge carbonate gas discoveries made in recent
times.
This focus on this area extends to the Middle East where we will
see a well in Lebanon. Africa is likely to play host to between six
to eight HIWs in 2021 targeting well over 10 Bboe in place. Two of
these wells have the potential to be basin openers and six play
openers, all targeting prospects with in-place resource exceeding 1
Bboe.
In Asia-Pacific, there is potential for six wells to spud. With
half of these focused on proven plays in emerging basins, the other
half are testing unproven plays in frontier basins.
Finally, in Frontier North America, East Canada could see two
HIWs drilled in 2021,one of the prospects having the potential to
be a super-giant.
