Oil and gas exploration is regaining momentum after the lean years in which budgets were slashed, with seismic technology and greater flexibility by governments able to help yield a new crop of giant discoveries, executives at a London conference said Tuesday.
Opening the International Petroleum Summit in London, BP chief executive Bob Dudley said the conventional deepwater oil industry was not threatened by the competitive advantages of US shale.
"The deepwater looks very attractive in many places in the world so I don't think it's either-or," Dudley said. "Exploration is not over by any means. What's more prevalent now is the amazing amount of data analytics you can do on seismic to make a decision [on whether] you want to explore and raise the probability of a find. That's probably the biggest change. There's still lots of exploration happening."
The comments, echoed by executives from Total, Italy's Eni and Spain's Repsol, come as spending on conventional oil and gas exploration and appraisal is estimated to have fallen by 60% since 2014, and is likely to total $37 billion this year, according to a recent forecast by consultancy Wood Mackenzie.
Eni's chief exploration officer, Luca Bertelli, said he shared the optimism. He noted that even Eni, with one of the most successful exploration records of the last decade, had imposed constraints on its explorers. Its exploration budget had been slashed by 40% and it was drilling a third of the number of wells that it did in 2013-14, many being close to existing finds rather than frontier locations, he said.
But Bertelli said the company was working to "reshape" its internal processes to cut the lag between making a discovery and launching commercial production, enabling deepwater finds to compete against shale -- in which the Italian company has refused to invest.
Bertelli said oil companies generally had worked with national governments in the downturn to help their countries become more attractive for investors.
"A wide range of opportunities are still available for the industry," Bertelli said, although he added these were likely to be confined mainly to the Atlantic for international oil companies.
"The industry can open up new basins and super-basins in the near future," particularly by increasing cycle times and digitalization, he said. "Exploration is not over at all."
TOTAL'S NORTH SEA OPTIMISM
Total senior vice president for exploration Kevin McLachlan said the French major aimed to drill 50 exploration and appraisal wells in 2018-19, with around 25% being in frontier areas, and noted that Total had ambitions in Papua New Guinea as well as the Atlantic region.v
"This is the best time to be executing a conventional exploration program -- [license] capture, seismic, drilling costs are all low," he said. "This downturn that we've just lived through is an opportunity. We've certainly done our best to capture and exploit that opportunity," McLachlan said.
He also voiced hope for another billion-barrel oil discovery in the North Sea similar to the Buzzard find in 2001. "I've given our team the challenge: there will be another Buzzard, make sure that Total's name is on it," he told S&P Global Platts on the sidelines of the event. "We're going to continue with prudent investment and we'll continue to look for those opportunities."
Source: S&P Global Platts
