Exploration plans are being redrawn and the well count is expected to drop by as much as 35 per cent on 2019 levels due to the “double whammy” of the oil price collapse and COVID-19 pandemic, according to market research provider Westwood Global Energy Group.
At the start of the year, the number of high-impact wells was expected to be similar or slightly higher than the 93 wells completed in 2019.
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Westwood said on Monday that it now expected around 60-70 high-impact exploration wells to be completed by the end of 2020, back to the numbers seen from 2016 to 2018 after the 2014 oil price crash.
Around 2.1 billion boe has been discovered so far this year from the 26 high impact wells completed and 2.5 billion boe of risked volume is being tested by wells currently drilling, dominated by the Shafag Asimam well in Azerbaijan , with about another 4.3 billion boe risked from the remaining ‘expected’ wells in the programme yet to spud.
The market researcher now expects to see a total volume of around 6 to 9 billion boe to be discovered in 2020, down 40 per cent or more from the 15 billion boe discovered in 2019, which included giant discoveries in Russia and Iran.
In 2020, a firm rig contract is no guarantee of a well being drilled. Westwood provided examples of CNOOC’s planned Pelles A-71 well in Canada’s Flemish Pass being postponed due to COVID-19 concerns as well as the Stangnestind prospect in the Barents Sea, by Aker BP.
According to the company, contracts are being closely scrutinised and, in some cases, force majeure clauses were triggered.
All regions are expected to see a decline in drilling, with North America including Mexico likely to take the biggest hit, although it will still see the most wells.
The Eastern Mediterranean may have very few high-impact wells in the rest of the year, while Sub-Saharan Africa will likely only see 3-5 wells being completed.
Drilling plans in the Central North Sea, Guyana, Suriname, and the shallow water Campeche area in Mexico are likely to be less affected, although COVID-19 may yet limit operations even where companies are keen to drill.
“ 2020 could have seen the increase in exploration drilling seen in 2019 continue but COVID-19 and the collapse in oil prices has put paid to that. A 60-70 high impact well programme now looks a reasonable estimate, though 2020 plans remain fluid. Exploration is down in 2020 but is not out ”, Westwood said.
Image by: SP Mac – used under permission from the photographer
about 6 years ago
Exploration plans are being redrawn and the well count is expected to drop by as much as 35 per cent on 2019 levels due to the “double whammy” of the oil price collapse and COVID-19 pandemic, according to market research provider Westwood Global Energy Group.
