Exploration's way forward is clear: less is more. As the industry becomes leaner, smaller, more efficient and more profitable, we examine the new role for exploration and the impact on the corporate landscape.
Conventional exploration's problem is not the volumes, in fact new field exploration is developing faster than oil as the industry's top organic growth engine. But could the troubling recent dip in discovered resources signal a decline for conventional exploration? Or will explorers find a way to make projects even more economical?
While the oil and gas exploration industry will see a return to profitability in a US$50-60 oil price world, tight budgets will force difficult choices and lead to enhanced prospect quality. Sustained efforts to reduce costs across access, exploration and development will see returns of enhanced resource conversion of discoveries. Exploration will play a smaller role in reserve replacement, with improved efficiency coming from less investment and fewer, lower-risk wells.
A refocused, leaner industry and the discovery of smaller volumes will result in a less diverse corporate landscape, with some companies unable to sustain exploration as they have in the past. A heavier reliance on other renewal options — unconventionals, discovered resource opportunities, enhanced recovery and M&A — will be key. Who will take centre-stage, who will retreat and who will discover the best opportunities to boost their exploration?
In a three-part video series exclusively for SEAPEX 2017, Andrew Latham explains how explorers can create more value and become even more efficient in a lower for longer oil price environment. Find out where new discoveries will be located, which are still exploring and how independents competing with the majors.