‘World-class’ deep-water discoveries fuel record year for oil and gas exploration

The global oil and gas exploration sector in 2022 had its strongest year in more than a decade in value terms, with at least $33 billion added through new discoveries, a report by consultancy Wood Mackenzie has claimed.

“In its work to improve portfolios by adding lower-carbon, lower-cost advantaged hydrocarbons, the sector created at least $33 billion of value and achieved full-cycle returns of 22%, at $60 per barrel Brent prices,” the report noted.

Bang for buck

Wood Mackenzie’s ‘Oil and gas exploration: 2022 in review’ stated exploration well numbers in 2022 were less than half the numbers during pre-pandemic years, “yet the total volume of 20 billion barrels of oil equivalent matched the average annual volumes of 2013-2019”.

“2022 was a standout year for exploration,” Julie Wilson, director of global exploration research at Wood Mackenzie noted.

Wilson said the “highest value came from world-class discoveries in a new deep-water play in Namibia, as well as resource additions in Algeria and several new deep-water discoveries in Guyana and Brazil, where the latest wave of pre-salt exploration finally met with success”.

“The average discovery last year was over 150 million barrels of oil equivalent, more than double the average of the previous decade,” she stated.


Strategic approach

Wood Mackenzie claimed that “explorers were able to drive very high value through strategic selection and focusing on the best and largest prospects”.

“The discoveries bring higher-quality hydrocarbons into companies’ portfolios, allowing them to reduce carbon by displacing less advantaged oil and gas supplies while also meeting the world’s energy needs,” it added.

The report noted that “liquids accounted for 60% of new resources discovered”, making it the third such occasion in 20 years that liquids made up most of the new discoveries.

“There is a lot of uncertainty in future long-term demand scenarios for oil,” Wilson said.

“Explorers are accelerating oil exploration to meet near and mid-term demand, while gas exploration was focused in geographies that can supply the gas-hungry European market.”

Wood Mackenzie believes that by 2030, “fast-tracked development of these new discoveries” could deliver 1 million barrels per day in oil and 500,000 barrels of equivalent per day gas production, “generating $15 billion in free cash flow”.

The exploration sector continues to be dominated by national oil companies and majors, with TotalEnergies, QatarEnergy and Petrobras leading the way in net newly discovered resources in 2022, Wood Mackenzie stated.

Source: https://www.upstreamonline.com/