Julie Wilson, Research Director, Global Exploration and Susan Miles, Senior Research Analyst
Some things won’t change for exploration in 2022. Discipline will hold, with continued focus on commercial quality of prospects and full cycle returns. Budgets and well counts will grow only slightly, despite a better price outlook. The path ahead isn’t easy in a decarbonising world – all explorers will need to work harder on stakeholder engagement. Sustaining social licence to operate will become a bigger challenge than ever.
We asked our experts what explorers will focus on in 2022. Fill in the form on this page for a complimentary copy of the full report, or read on for a short introduction.
The hunt for advantaged resources will define upstream exploration
Exploration still has a role to play in upstream – even on a 2 °C pathway. It can deliver new resource that’s lower- cost and less carbon-intensive than existing resources. The hunt for these advantaged resources will define the sector in 2022, as indeed it did in 2021.
We expect to see around a 10% year-on-year increase in well numbers. Fulfilment of Covid-postponed drilling commitments will be part of this growth.
Deepwater is likely to account for half of all new volumes. Carefully selected deepwater drilling will continue only where explorers expect highly productive reservoirs. This includes giant prospects in Brazil, Guyana, Suriname, Namibia and South Africa. Onshore, NOCs will lead exploration of their domestic unconventional plays, notably in China and the Middle East.
Around half of the resources added will be gas. We’re watching high-impact gas wells coming up in basins in Egypt, Turkey, Indonesia and Mozambique, among others. With an eye on both lead times and emissions intensity, explorers will favour gas that can access markets via pipe over LNG.
Stakeholder engagement will be vital as explorers seek to nuance their messaging
Exploration is under intense scrutiny. Investors and activists are asking tough questions about how the search for new fields squares with the global call for an accelerated energy transition. Explorers’ answers – decarbonisation from the lower emissions intensity of new fields – are not simple arguments.
We expect a range of different approaches to these challenging optics:
- For most, exploration success will go without fanfare, except for the very largest finds.
- Expect to hear more about how advantaged exploration will sustain upstream’s ability to fund low-carbon investments.
- Explorers will argue they can be part of the decarbonising solution. Operators will spell out the lower emissions intensity of new fields versus old. Subsurface teams will champion their role in the emerging green exploration themes such as CCUS and hydrogen storage, not least as a talent retention strategy.
The stakes are high. Licence to operate is not a given, no matter what contracts may stipulate. Explorers will be treading cautiously among many different stakeholders.
What other factors will shape exploration in 2022?
Read Global exploration: 5 things to look for in 2022 for our full set of predictions for the year ahead. It includes a look at: deepwater as a top resource theme; Africa’s potential for an exploration comeback; and a look the move away from traditional licensing rounds.
Fill in the form at the top of the page for your complimentary copy.