White Paper

Conventional Oil and Gas Exploration – White Paper

In recent years, the oil and gas industry has suffered a significant downturn. Oil prices, which were more than $120 per barrel in 2012, fell to below $30 per barrel in 2016 as a result of an oversupply from shale producers and the cooling of global economic growth.

Exploration Impact of Downturn

With this momentous shift, the focus of the oil and gas sector turned towards delivering efficiency improvements. Building on cost reductions and the rationalisation of activity, in particular the deferral or scrapping of major projects, the industry has positioned itself to succeed in this ‘lower for longer’ price environment.

In the conventional sector, exploration has played its traditional role in upstream growth but, with the lower price environment, that has been particularly challenging. Though discovery
rates have remained stable, fewer wells have been drilled globally. In 2016, there were only 174 oil and gas discoveries globally, versus an average of 400-500 per year up until 2013.

Recently, as prices have become less volatile, there has been increased offshore exploration activity, with wells being drilled in a number of new and existing areas. This is potentially an early sign of a global recovery. Some key indicators of improving industry confidence in oil price include:

• Activity levels in the Deepwater GOM are returning to pre-slump levels
• Tullow, BP and Kosmos bid on and were awarded blocks offshore Cote d’Ivoire.
• ExxonMobil’s continued activity and success offshore Guyana.
• Significant interest in Mexico’s bid round in 2018.
• Siccar Point’s Cambo appraisal and Lyon exploration wells, to be drilled in the West of Shetlands in 2018.

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