Estimated 180 Bbbl of reserves yet to be discovered

According to a newly released study by Wood Mackenzie and Fugro Robertson "The Future of Deepwater - Analysis of Possible Scenarios," there are 180 Bbbl of oil equivalent oil and gas reserves in deepwater, yet to be found. That is more than twice the volumes already discovered.

According to a newly released study by Wood Mackenzie and Fugro Robertson "The Future of Deepwater - Analysis of Possible Scenarios," there are 180 Bbbl of oil equivalent oil and gas reserves in deepwater, yet to be found. That is more than twice the volumes already discovered.

"To date, the geography of deepwater has been the story of the "big four" countries, Angola, Brazil, Nigeria, and the US Gulf of Mexico," according to Andrew Latham, vice president energy consulting at Wood Mackenzie. "We have identified the potential for Mexico to join this elite group, once exploration work begins."

"Both the US and Mexico have risked exploration potential for many tens of tcf gas reserves which could be a major new source of gas into the North American market, Latham said. "In addition, Australia and Egypt have very substantial gas potential - each with yet-to-find potential of 80-120 tcf. However, market access for this resource will be limited in the near term."

The rise of deepwater has coincided with a decline in exploration success elsewhere, with deepwater now accounting for around two-thirds of overall reserves in new oil and gas finds. The study concludes that most of the key deepwater plays should continue to achieve attractive returns ranging from 12% to 20% on a full-cycle basis. These constitute some of the best returns available from exploration.

The study's corporate analysis focuses on the 21 leading companies in deepwater. Petrobras has been identified as the leading deepwater player by value followed closely by BP and Shell. ChevronTexaco, ExxonMobil, Petrobras, BP, and Shell all hold similar upside value in their deepwater acreage. Several mid-sized companies stand out as having particularly attractive exploration acreage positions, including Devon, ConocoPhillips, Kerr-McGee, and Murphy.

The study provides a reliable and independent assessment of the relative merits of actual and prospective investments in these deepwater plays, Latham said.

07/09/04

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