LONDON, HOUSTON and SINGAPORE, Nov. 21, 2024 (GLOBE NEWSWIRE) — Over the past decade, investment in oil and gas exploration has fallen by two-thirds, but the sector still has a critical role to play in decarbonization and in the supply of advantageous barrels as part of the energy transition, according to the latest “Horizons” report from Wood Mackenzie.
According to the report, “No country for old fields: Why high-impact oil and gas exploration is still needed,” the world currently has sufficient resources to meet demand, backed by an estimated $3 trillion stockpile. of barrels of oil equivalent (boe). This observation translates into a resource lifespan greater than 45 years for oil, and greater than 60 years for gas.
“With so many resources already being exploited, one might wonder why exploration is still necessary. » observes Andrew Latham. “It is important to emphasize that new deposits discovered would not increase demand, because it does not increase when exploration proves successful, nor does it decrease otherwise. What we can say is that successful exploration reduces carbon intensity, lowers the cost of oil and gas for consumers, and provides more value for both resource holders and for explorers. Given the proven resilience of demand, it is necessary to invest in new sources of supply to replace more polluting alternatives. »
Reduction of carbon emissions
According to the report, reducing Category 1 and 2 emissions, or those generated during the extraction and refining process, is better achieved by discovering new deposits than by maintaining older deposits. Thanks to modern decarbonization technologies and the best production capacities of the installations, the new deposits are cleaner.
Wood Mackenzie's “Lens Upstream” study reveals that new fields preparing to start production in the coming years will have an average intensity of category 1 and 2 emissions of around 17 kgCO2e/boe over the period 2025-2030. In comparison, the current supply from mature deposits averages 28 kgCO2e/bep.
“The potential gains are not negligible,” explains Mr. Latham. “Exploration carried out over the current decade is on track to provide 12% of the world's oil and gas supply. Assuming that these new deposits replace current supply options, characterized by an emissions intensity typical of older deposits, global category 1 and 2 emissions would be reduced by around 6% in 2030, i.e. 100 Mtpa of CO2e. »
Performance with high added value
The economy also boosted activity. Since the upstream cost reset a decade ago, the sector's exploration performance has been attractive.
“Exploration is the most cost-effective way to revitalize a portfolio with new deposits, particularly for companies seeking advantageous or low-carbon, high value-added resources,” continues Mr. Latham. “These valuable resources are difficult to buy at a good price; it is much better to extract them. »
According to the report, full-cycle returns have consistently reached double digits every year since 2015, averaging 15%. Discoveries of new deposits are valued at a price well above their research cost, with a net value creation of more than $160 billion since 2015, based on a planning price of around $65 per year. barrel of Brent in the long term for the sector (almost double the current market value of the supermajor BP).
Over the past five years, Wood Mackenzie calculated that industry average breakeven prices for exploration were around $45 per boe (Brent, 10% NPV), compared to $65 per boe for mergers. and acquisitions. Due to the shortage of such assets in the market, the gap widens even more for advantageous resources.
Superior efficiency in frontier and deep-water explorations
Frontier areas, defined as areas having no production from similar reservoirs in the same basin, are distinguished by the scale of available resources, especially since deepwater exploration in border basins can offer the most efficient deposits. Frontier drilling has contributed more than 80 million boe per well, a figure seven times that of wells from mature fields, most of which are located in the deep sea. Projects located in deep waters benefit from high recovery per sinks and tend to have lower emissions intensity (<15 tco2e/kboe) to that of projects located on the continental shelf and on land.
According to the report, most new exploration opportunities will reside in deep waters, because with depths ranging from 400 meters to over 3,000 meters, the bulk of the world's deep water basins have been subject to exploration. low number of drillings.
Determination of resources by exploration well according to the depth of the basins
“Eager to cross the next frontier, the majors have jumped on the deep-water exploration bandwagon,” adds Mr. Latham. “They now hold almost 70% of their net acreage in deep water and devote a similar proportion of their exploration and evaluation spending to this sector alone.
“A growing number of national oil companies are following suit as governments now prioritize increasing production to sustain national energy security. »
Among these untapped resources, there is still a lot of oil and gas to be discovered. If the sector has found less oil in recent years than in previous decades, it is because fewer wells have been drilled.
The global skimming curve reveals a nearly straight trajectory with a steady gradient of about 30 million boe discovered per well, including low-yielding oil wells. This trend has remained unchanged over the last forty years for more than 50,000 wells. A sharp decline in such a long-standing trend seems unlikely.
“There are still immense possibilities for exploration, but the field suffers from a major image problem,” underlines Mr. Latham. “The widespread belief that exploration is bad for the climate threatens every aspect of the business, from access to opportunities to the social license to operate and attracting and retaining qualified personnel. Misconceptions abound in this regard and overcoming them will not be easy. Exploration has a role to play in decarbonizing oil and gas supplies. »
For further information please contact the Wood Mackenzie Media Relations team:
Mark Thomton
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About Wood Mackenzie
Wood Mackenzie is the global specialist in renewable energy, energy and natural resources. Data is our strength. Implemented by men and women. In the midst of the energy revolution, businesses and governments need reliable and actionable information to successfully transition to a sustainable future. That's why we operate across the entire supply chain with unrivaled breadth and depth, drawing on more than 50 years of experience in the natural resources sector. Today, our team brings together more than 2,000 experts at 30 sites around the world, who strive to guide our clients in their decision-making through real-time analyses, an advisory approach, to protests and thought leadership. Together, we give them the data they need to distinguish risks from opportunities and make sound decisions at the right time. To find out more, visit the website woodmac.com.
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