Three mega deepwater gas plays have emerged in the last 10 years. The Eastern Mediterranean has 60 tcf of gas (10 bnboe) across Israel, Egypt and Cyprus, more than half in Eni’s Zohr field. East Africa has over 160 tcf (27 bnboe) in Mozambique and Tanzania. NW Africa, now holds over 35 tcf (6 bnboe) in Mauritania and Senegal including BP and Kosmos’s latest Yakaar discovery.
Is gassy success in exploration a problem? Up to a point in that oil is typically quicker to commercialise and can be higher value per barrel. But gas too has its attractions as a long life resource with stable, predictable cash flows. Gas’s rise is also opportune as upstream companies begin to adapt to a lower carbon future.
Dwindling volumes of oil discovered have coincided with the emergence of huge US unconventional resources. Tight oil will meet virtually the entire global supply gap we forecast over the next few years.
Indeed our modelling suggests that the market’s need for production from new conventional discoveries could be vanishingly small, even on a 10-year view.
A devil’s advocate might ask a few pertinent questions. Is conventional exploration worth the money? Can explorers ever deliver full cycle value tested against lower-for-longer price decks? Does the business model still work?
Three simple responses: The Guyana discoveries are proof that big oil prospects are still out there, and that frontier exploration can not only pay off, but also push tight oil volumes to the right.
Eni’s swift commercialisation of Zohr shows the potential scale and value in conventional gas.
Last, exploration is a long game. Tight oil won’t grow forever, and the seeds of future conventional exploration success need to be sown now.