Offshore staff
OSLO, Norway – At least nine of the world’s top planned exploration wells for 2020 are at risk of being suspended as a result of the combined effect on oil and gas activities of COVID-19 and the oil price war, according to Rystad Energy.
These wells, located in Norway, Brazil, the Bahamas, Guyana, the US, Gambia, and Namibia would target a combined 7 Bboe.
The wells that the analyst has identified as candidates for suspension are at risk because of their commercial viability under the current price levels, shutdowns that affect the supplies of equipment components, operators’ prioritization among other targets and limitations in crew movements, among other reasons.
Rystad Energy senior upstream analyst Palzor Shenga, said: “Given the prevailing global situation we now foresee that the cumulative discovered volumes by the end of the year could go even below the 2016 level of 8.9 Bboe, which was the decade’s lowest. This will solely depend upon how many key wildcat wells will still see a spinning drill bit in the coming months, as some of them could be either suspended or postponed.”
In 1Q 2020, explorers have only uncovered new volumes of around 2.5 Bboe. The 22 discoveries are evenly split between onshore and offshore regions, with gas representing just over half of the volumes. Volumes are down about 40% from the same period of 2019, and the number of discoveries has almost halved.
At the beginning of the year, the analyst believed that the global discovery trend would continue its upward trajectory with an expected increase in volumes. However, the current global market situation will bring many challenges to exploration.
The understanding of the geological context and complexities of the subsurface remains unchanged – it is the unexpected market turmoil above the surface that will play the key role in the coming months, Shenga concluded.
04/07/2020
