Successful Hydrocarbon Exploration in Mature Areas
Point Resources, a merger of three Norwegian companies, has acquired ExxonMobil’s Norwegian-operated business, including the Balder, Ringhorne, Ringhorne East, Jotun and Forseti fields. The company’s business model is simply to seek value creation in mature areas of the Norwegian Continental Shelf (NCS) with a focus on four core areas. There is no mention of frontier exploration. In just two years production has reached 40,000 boepd, and by 2022 total production is expected to increase to more than 90,000 boepd.
Another company that has had success with exploration in mature areas is Faroe Petroleum. Their 2016 Brasse discovery on the NCS was a company maker, and the location is stunning as it has prolific oil fields on all sides. Nevertheless, it took many years to have the prospect drilled, despite the fact that quite a few explorationists knew about it.
Near-Field Hydrocarbon Exploration
A key driver for near-field exploration may be the need to fill oil processing facilities due to declining production from fields that have passed plateau production. As an example, Aker BP is exploring near-field prospects and leads to mitigate production decline from the Ivar Aasen field on the NCS, which started producing just a year and a half ago. Small discoveries can result in high value contributions for mid-size companies.
Statoil has recently changed its strategy into a ‘One North Sea’ approach, in which the region is treated as one subsurface domain, the strength being that it allows plays to be chased across the border. The company believes that significant value remains to be unlocked on both the NCS and UKCS, making both provinces highly attractive to exploration, largely because of the 2010 discovery of the Johan Sverdrup field, which clearly demonstrated that giant discoveries can still be made in mature basins.
Moving away from North-West Europe, statistics based on global analyses reveal that discovered resources for the last five years were less than the amount of oil produced. In a long-term perspective this is of course very bad news as oil company values are reduced. However, and this is really important, the statistics also show that mature fields, both on- and offshore, grow significantly in terms of reserves as time goes by.
What Must We Learn?
The lesson to learn is the same as we have experienced in the North Sea: exploration in mature areas, including near-field exploration, creates value for oil companies as well as the host state.