If you pay attention to the Chinese zodiac, you’ll know that 2013 was not the Year of the Elephant in international exploration.
Heck, it wasn’t even the Year of the Big Gorilla.
As 2013 drew to a close, there had been “no King Kong discoveries” reported from exploratory drilling around the globe, said AAPG Honorary member Pete Stark, senior research director and adviser for IHS in Englewood, Colo.
“We’ve got some interesting things going on. It looks like this might be one of the first years we’ll have less than 400 discoveries outside the United States and Canada,” Stark said.
You’d have to go back to the 1970s to find a time when the industry averaged 400 oil and gas discoveries outside North America, he noted.
“In 2008, we had over 700 discoveries outside the onshore United States and Canada,” Stark said.
Another problematic trend: No one was finding giant oil fields, fields with more than 500 million barrels of recoverable crude oil.
By early December, the industry had seen only 11.8 billion barrels of oil equivalent in discoveries, including only an estimated 4.9 billion barrels of crude, according to Stark.
So what was going on?
Think about a couple of things.
First, some big countries that typically report major discoveries just didn’t see that much successful exploration activity.
Second, consider the political situation in many of the world’s significant oil provinces, where you might expect big discoveries.
Anything political going on in Libya? Iraq? Egypt? Venezuela? Even Algeria got hit with a terrorist attack at a hydrocarbon facility in January. Much of the oil-prone world looked like a political basket case in 2013.
“China is down. The former Soviet Union is way down from what it used to be. Libya is down,” Stark said. “There’s a lot of geopolitical stuff going on in places in the world that are oil-prone, and that’s been impeding investment.”
And there’s a third trend: Companies did pretty well at finding new reserves of natural gas in 2013. Most of that barrels-of-oil equivalent stuff was gas, and maybe condensate, with only scattered meaningful discoveries of crude.
“If we look at just the oil discoveries last year, the biggest one reported to date is Statoil’s Flemish Pass discovery offshore Newfoundland,” Stark said. “We give it 425 million barrels.”
Here are the top five wells of 2013:
1. Cobalt International’s Lontra #1 pre-salt discovery well in Block 20, offshore Angola.
The company initially reported this as an oil and gas find but it looks to be primarily gas/condensate, Stark said.
2. Eni’s Agulha discovery in Area 4, offshore Mozambique.
The Agulha structure could hold 5-7 trillion cubic feet (Tcf) of gas, the company estimated.
3. Statoil ASA’s Tangawizi-1 well on Block 2 offshore Tanzania.
Statoil and partner ExxonMobil Corp. have made a string of gas discoveries in East Africa, where the Tcfs keep piling up.
4. The Ogo-1 discovery on the OPL310 license offshore Nigeria, by Optimum Petroleum Development Ltd., Afren plc and Lekoil Ltd.
Total oil and gas in place is still being evaluated in the Cretaceous Ogo play.
5. The Bay du Nord discovery drilled by Statoil ASA with partner Husky Energy on EL1112, about 310 miles offshore St. John’s, Newfoundland.
The find confirmed oil-production potential revealed by Statoil’s nearby Harpoon discovery, announced earlier in 2013.
Elsewhere, significant oil discoveries continued in the Kurdish region of northern Iraq.
Cobalt’s exploration project in the Kwanza presalt basin offshore Angola was closely watched by the industry, in hopes of seeing an analog to drilling results offshore Brazil.
“That Angola discovery is really a key for Africa,” Stark noted. “We may see the start of a significant new boom in presalt drilling.”
He also identified oil discoveries onshore Kenya by Tullow Oil plc as a meaningful development in African exploration. Tullow announced a northwestern Kenyan oil find near the Uganda border early in the year.
“That’s the first real breakthrough in Kenya. There was a follow-up at 60 million barrels, and that was also Tullow,” Stark said.
Several companies either discovered or verified major gas accumulations offshore East Africa.
In North Africa, Sonatrach announced an oil discovery in Algeria about 70 miles from Hassi Massaoud, the country’s largest oil field.
The Far East region was the most successful area for a number of new discoveries in 2013, although the average field size was less than 15 million barrels of oil equivalent, Stark noted.
“Malaysia, Indonesia and India are at the top of the pack,” he said. “China is a distant fourth. A lot of that is natural gas.”
In Australia, oil discoveries continued in the onshore Cooper Basin, which includes unconventional targets. Explorers landed good wells offshore Indonesia and OMV of Austria continued its success in Pakistan.
“If you look at South America, it’s had surges,” Stark observed, “with the big surge being the Brazil deepwater.”
Onshore northern Mexico, the Burgos Basin, the Sabinas Basin and a possible southern extension of the Eagle Ford unconventional play into the country are being eyed.
“The results have been a mixed bag,” Stark said. “Wells are IP-ing at one-to-three million cubic feet a day. The costs on the Mexican side are fairly steep.”
Drilling continued in the Neuquen Basin in Argentina, where tentative, early production from the Vaca Muerta shale began early in 2013. Stark noted that most wells in the basin are still vertical.
In unconventional exploration in Colombia, “there are no great signals at the moment whether tight oil will have a breakthrough,” he said.
Exploration success offshore Norway and in the northern North Sea prolonged hope for the area as an oil-producing province.
“Amazingly, it’s doing okay,” Stark said.
Going into an established field area, Statoil said it sees up to150 million recoverable barrels of oil equivalent in new resources in its Gullfaks license area. Gullfaks is in the North Sea’s Shetland group/Lista formation.
“The other thing that’s going to be interesting in Europe is what might be the geopolitical fallout from the controversy over fracing,” Stark said.
For whatever reason, 2013 brought a lull in international exploration activity. Stark believes geopolitics was a big influence.
“I think it’s the uncertainty factor out there,” he said. “A lot of companies have shifted away from that uncertainty into North America.”
Last year could have been nothing more than a lull. Or it might have been the start of an important transition. Call it a question mark year, not an exclamation point.
“It’s an intriguing year,” Stark said. “And I think it’s one that has a lot of people scratching their heads.”