Oil and gas prices were relatively high in 2022, although they have come down significantly from their highs reached last summer. Despite the drop, oil prices have remained higher than what we have seen for the last seven years, and natural gas was at level not seen in over a decade. Even with these prices, exploration activities have remained subdued as energy companies remain weary of political and pricing volatility and instead focus on short cycle projects and returning cash to shareholders. Global lease rounds in 2022 were at the lowest level since 2000, with only 44 expected, and acreage awards are also at a 20 year low.
Lease rounds have dropped significantly in Russia, the U.S., and Australia, while new acreage awarded in Asia has nearly quadrupled compared to the same period in 2021. The largest contributor of lease blocks awarded this year is Brazil (59) followed by Norway (54), India (29), and Kazakhstan (11).
High-impact drilling
Despite all this news, high-impact well activity is rebounding from a 2021 low and there remain some hot areas for exploration with several significant discoveries being made in 2022:
- Guyana – The Guyana-Suriname basin remains one of the hottest areas of exploration. Guyana is considered the most significant new deepwater producer and will be producing more than 1 MMBOEPD in the near future. A group led by ExxonMobil has already made a number of discoveries (Exhibit 1) on the Stabroek block with recoverable reserves totaling 11 billion barrels of recoverable oil and 30 TCF of gas. Guyana is planning on auctioning off an additional 14 blocks. Much of the reserves found to date have been in Upper Cretaceous turbidite sands, similar to west Africa. Interestingly, ExxonMobil also discovered oil in what is interpreted to be a carbonate bank formed on a sinking volcano.
Exhibit 1: Stabroek block, located ~200 km off Guyana, covers ~626,800 sq. km. (Source: Energy Northern Perspective)
- Namibia – In what is being referred to by some as “the next Guyana”, two recent discoveries earlier this year have propelled Namibia’s Orange Basin into the spotlight. TotalEnergies’ Venus discovery is considered Sub-Saharan Africa’s biggest ever oil find with more than 3 billion barrels of reserves. Twenty days before the Venus discovery, Shell’s Graff-1 well made an oil discovery in Cretaceous sands believed have ~300 MMBOE of reserves. It has been reported that a Suriname-Guyana scale oil province is possible, and the discoveries could also be significant for South Africa, where the Orange Basin extends.
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