Global oil and gas exploration spending is up at $50 billion in 2023 but reserves are down
Energize Weekly, August 30, 2023
Conventional oil and gas exploration is on the upswing and spending is expected to reach $50 billion in 2023 – the highest in five years – but discovered volumes are falling to new lows, according to Rystad Energy research.
Industry consultant Rystad Energy estimates that in the first half of 2023, companies found 2.6 billion barrels of oil equivalent (boe), 42 percent lower than the first half of 2022 when 4.5 billion boe were discovered.
The average size of the discovered reserves has fallen by 16 percent in 2023. In the first six months of 2022, 80 oil and gas discoveries were made, averaging 56 million boe, compared to 55 discoveries for the same period in 2023, with an average of 47 million boe.
While offshore activity accounted for about 95 percent of exploration spending so far this year, it has yielded about two-thirds of discovered volumes of oil and gas.
“The exploration and production (E&P) industry is in a transitionary period, with many companies exercising increased caution and shifting their strategies to target more profitable and geologically better-understood regions,” Rystad Energy said. “This strategic shift and the failure of several critical high-potential wells are contributing to the precipitous drop.”
Offshore areas including shelf, deepwater and ultra-deepwater areas have become the focus of exploration.
Activity in Guyana’s Stabroek offshore block continues to grow, and the Caribbean country leads in discovered volumes, with 603 million boe in 2023. Turkey is in second place with 380 million boe, follow by Nigeria with 296 million boe and Namibia with 287 million boe.
Discoveries are spread evenly among shelf, deepwater and ultra-deepwater, but Rystad Energy said it expects more activity in the ultra-deepwater market with 31 “high-impact” wells to be drilled this year.
Only four of the 13 wells drilled so far this year hit hydrocarbon reserves, though the size of the discoveries has not been made public for three of the wells.
“Upstream exploration companies are prioritizing the offshore sector, trying to capitalize on underexplored or frontier areas to unlock new volumes through high-risk, higher-cost offshore developments,” Aatisha Mahajan, Rystad Energy vice president of upstream research, said in a statement.
“If exploration efforts continue to yield unimpressive results for the remainder of the year, 2023 could be a record-breaker for the wrong reasons.” Mahajan said.
National oil companies (NOCs) have the most extensive subsurface resource base and are projected to account for more than half the exploration spending in 2023.
The six major, investor-owned oil companies – ExxonMobil, BP, Shell, TotalEnergies, Eni and Chevron – are expected to spend about $7 billion this year on exploration, about 10 percent higher than in 2022 and make up 14 percent of the total global exploration spending.
“There may yet be some success to come this year, as only 30 percent of anticipated wells have been completed,” Rystad Energy said. “Only 23 of the remaining 56 exploration wells are either drilled or are expected to be drilled this year, meaning about 60 percent are likely to be drilled or postponed until 2024. So, even if 2023 proves unsuccessful, a rebound could be on the cards next year.”