E&P exploration struggled in 2016, with lower investment budgets resulting in lower overall activity. In 2016, a total of 440 offshore exploration wells were drilled, compared to 740 in 2014. At the same time, the exploration results were disappointing in 2016.
There has been one positive aspect for exploration in 2016: due to more efficient drilling operations, the speed of drilling has increased considerably. In Norway, the drilling speed per meter increased 20–30% between 2014 and 2016. At the same time lower prices within the industry have decreased exploration costs with, for example, rig rates dropping 55% over the last two years.
High Impact Wells
However, there are several exciting exploration wells coming up. The illustration below shows some of the highest impact wells expected to be drilled over the next year.
Statoil is planning to drill Norway’s northernmost oil well, Korpfjell, in the Barents Sea. The Korpfjell prospect was the most sought-after acreage in the 23rd licensing round. While NPD originally believed the formerly disputed area was gas-prone, the 3D seismic revealed clear liquid hydrocarbon indicators. The structural closure is about four times bigger than that found at Johan Sverdrup.
The Ironbark prospect is a large, simple, untested structure in Australia, operated by Cue Energy. The prospect is estimated to contain 15 Tcf recoverable gas resource in two reservoirs in the Mungaroo Formation.
In the Philippines, Total is planning to spud the Halcon prospect. Gross prospective resources at Halcon have been estimated at 6.736 Tcfg and 169 MMbc.
The JV partners (ExxonMobil and COPL) spudded the Mesurado prospect in Liberia in Q4 2016. The pre-drill prospective resource estimate for the primary prospect is in excess of 1.3 Bbo. The Ebola crisis and the decline in oil prices since 2014 have curtailed recent activity In Liberia, but Mesurado-1 will represent the renewal of exploration activity in the area in 2016/17.
Despite offshore exploration going through a difficult time, we see improvements in efficiency and costs. Over the next 12 months, several high impact exploration wells will be spudded and the success of these wells will determine the commerciality of exploration going forward.