Upstream companies are starting to adapt to an environment where oil prices will be higher for longer, one where OPEC+ production discipline and US shareholder returns are just as important a factor in drilling as the physical flow of oil. Whilst 2022 witnessed several huge discoveries, most notably the frontier-opening Venus find in offshore Namibia, the aggregate tally of new reserves is still a fraction of upstream activity back in 2014 and 2015. Crudely put, we are still in a period of low upstream commitments, even if it’s getting marginally better than it was in peak coronavirus times. Buoyed by the likes of Venus, exploration activities are poised to bring us new surprises in 2023 and these top 5 exploration prospects are the most likely to shake up the market.
One of the most promising wildcats to be drilled this year has been in the making for quite some time and was first delayed by the ramifications of the coronavirus and then by the shaky status of Russia’s Lukoil, a 50% partner in the joint venture. Kazakhstan’s offshore area consists of several prolific fields, chief among them is the supergiant Kashagan field, however Zhenis is quite a different breed. It is the southernmost Kazakh offshore block, straddling the maritime border with Turkmenistan, therefore carries a lot of risk to it but considering the prolific resources of both Kazakhstan and Azerbaijan, exploration drilling might also launch a new frontier basin that was heretofore overlooked. The spudding of the first wildcat is already ongoing in water depths of 75-100 m some 80 km away from the Kazakh coast, and first results should be known in several months’ time.
The first ever deep-water wildcat drilled in Namibia’s offshore waters produced the largest oil discovery of 2022, with Venus establishing itself as a major find comparable to ExxonMobil’s 2015 Liza discovery. Followed through with Shell’s Graff discovery in an exploration well drilled simultaneously to Venus, the next step will see other producers joining the hype and spudding their wells in other license blocks. A French firm specializing in African upstream operations Maurel & Prom might be opening up another frontier in Namibia, spudding the Aurora wildcat this year – further out in the sea (190 km from Walvis Bay) and in relatively shallower waters (1250 m). Despite the differences, geologically Aurora should be similar to Venus, considering it is located in the license block just above TotalEnergies’ 2913B block, so in case the exploration well does hit commercial volumes of oil, it is going to be big.
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Deluged by recurrent news of Guyana’s Stabroek block providing another huge discovery, the oil untapped oil bounty of the Guyana-Suriname basin is surprising no one. However, Suriname has been less consistent in delivering new finds, especially after APA’s Rasper well stroke water in Block 53, pouring cold water on expectations that the Maka Central-Kwaskwasi-Sapakara triad can be seen extending towards the east. This year will see the drilling of a much-anticipated exploration well, one that has been in the makings for year, namely the appraisal of the Walker prospect. Walker is located in the Shell-operated Block 42 (the project used to be headed by Kosmos Energy before the US firm sold its portfolio to the oil major) and is believed to potentially contain up to 250 million barrels of oil equivalent. There is one big if – it is much to the north, i.e. further out into the sea, than all big discoveries in the basin so far so should its spudding confirm the presence of commercial quantities, Suriname will be opening up a new frontier and future exploration might move away from the maritime border with Guyana, deeper into the offshore zone.
The Cape Freels exploration well has been the talk of the town for quite some time, Eastern Canada’s oilmen have been mulling over its frontier-opening possibilities at least since 2019. The Cape Freels prospect, located some 400km from the coast of Newfoundland and Labrador, was initially assumed to hold 4-5 billion barrels of oil and gas, potentially double in size to the similarly offshore Hibernia field (discovered in 1979 by ExxonMobil), the geographically closest producing unit. Delayed by coronavirus and subsequent capital investment curbs, Cape Freels has by now transformed into Ephesus and BP is now fully set to drill the wildcat over the summer months. The oil is most definitely there, the most more pertinent question would be whether exploiting the ultra-deepwater unit to a total depth of almost 5 km would be commercially viable. If it turns out to be another Hibernia, Eastern Canada’s oil prospects will receive a much-needed boost.
Argentina has made some tremendous headway in tapping into the vast shale oil deposits of Vaca Muerta. However, apart from the “Dead Cow” there has been no intriguing frontiers opening in the Latin American country, up until now that is. Norway’s Equinor will soon start drilling the Argerich exploration well 300 km off the coast of Mar del Plata, the first-ever deepwater offshore well in Argentina. In water depths of over 1500 m, the wildcat will be spudded to a total depth of more than 4000 m, having finally overcome all the regulatory roadblocks posed by repeated queries coming from environmentalists. The drilling trio of Equinor, YPF and Shell hope to find a replica of geological conditions found in Namibia’s Venus discovery and recent images of oil seeps in the area of the CAN-100 license block seem to confirm that there is a working hydrocarbon system there.
By Gerald Jansen for Oilprice.com
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