know where you’re going, sometimes you have to know where you
vice president of industry relations with IHS Energy, will offer
a picture of recent and current exploration successes, plus examine
some of the critical issues impacting future exploration activity
when he kicks-off the "Recent Discovery and Development Case Histories"
forum at the AAPG Annual Meeting in Dallas.
will be held from 8-9:45 a.m. Tuesday, April 20.
talk is intended to provide the context for a bigger question that
hangs over the industry: Is it time for companies to start re-investing
heavily in exploration, or will access to large, undeveloped reserves
in various countries continue to command prime attention?
factors — to be discussed in detail during the talk — "contribute
to supply and price uncertainty and volatility, which hampers companies
interested in investing substantial funds in exploration," Stark
other hand, we see a growing number of companies who feel acquisitions
and mergers have become more expensive — and some firms, particularly
large independents, are growing through investment in exploration,"
these factors, both negative and positive, add up to a cloudy future
larger than 500 mmboe, continue to contribute a substantial part
of reserves added by exploratory drilling. According to Stark, IHS
Energy has tallied about 31 discoveries since January 2000 — fairly
widely distributed — totaling 41.6 bboe, or 49 percent of reserves
added exclusive of onshore North America. Moreover, 200 discoveries
larger than 100 mmboe accounted for 75.8 bboe, or 90 percent of
with the super giant Kashagan discovery, is the leading country
for discoveries since January 2000, with almost 14 billion barrels
of oil equivalent. The rest of the top 10 includes:
the U.S. Gulf of Mexico ranked ninth in the world during this period
with over three billion barrels of oil equivalent," Stark said.
in total, there are significant clusters of discoveries, he said,
to be found in the northern Caspian Sea region, which includes both
Kazakhstan and Russia; Iran and Saudi Arabia; the northwest shelf
of Australia (primarily gas condensate); and the Niger Delta and
Western Hemisphere Brazil recorded a series of giant discoveries,
all of which were credited to Petrobras," he said. "During 2000-01
Trinidad and Tobago recorded several large gas-condensate discoveries,
including the giant Red mango Field. BP’s Thunder Horse North
discovery was the largest (discovery) recorded since January 2000
in the U.S. Gulf of Mexico."
discoveries were key for a variety of reasons, ranging from their
size to market implications — and, Stark added, natural gas has
become a far bigger factor in recent years.
those discoveries were:
Sulige Field, with potential for 2.7 billion barrels of
oil equivalent, is important not only for its size but also
because it is just several hundred miles west of Beijing. "This
field will certainly have important market implications for
China," he said.
Dhirudai gas field off the India’s west coast, with
reserves of about 833 million barrels of oil equivalent, is
important because India is rapidly expanding its natural gas
markets — and Dhirudai provides substantial gas resources,
Nile Delta offshore Egypt, important because the added
gas reserves from these discoveries are helping to generate
a new LNG and gas pipe business in the eastern Mediterranean
The Sapphire 1 (discovered in 2000) is the largest discovery
to date in the Nile Delta with approximately 573 million barrels
of oil equivalent.
key African discovery isn’t even considered a giant field,
but its implications for future exploration off Africa’s
West Coast of Africa are enormous, according to Stark; Woodside
Petroleum’s discovery off the coast of Mauritania appears
to be commercial and will extend the prospectively of the African
Atlantic continental margin, he said.
has been the site of a series of geographically important gas
discoveries. The No. 1-RJS-587 Petrobras gas and condensate
discovery is the most significant find with an estimated 2.6
billion barrels of oil equivalent and although it will not be
developed for another six to seven years it changes the gas
supply outlook for Brazil — South America’s biggest gas
discovery has interesting implications in the future to potentially
restructure the demand situation and gas contracts in the southern
cone," he said. "It will likely impact gas from countries such
Bolivia and Argentina, affecting the regional market."
northwest shelf of Australia has been the site of a series
of large discoveries.
has recorded six discoveries offshore the northwest shelf that
are helping to stimulate a good deal of LNG competition targeted
for China," he said. "These finds are changing the amount of
gas available and allowing operators to chase new markets. The
primary market for LNG from this region used to be Japan, but
now new markets in China and even the West Coast of the United
States can (now) be explored."
Malaysia. Murphy Oil’s Kikeh discovery in deep waters
off Malaysia was significant because it was the first major
oil find in the area.
apparently has an offset to the discovery that looks promising,"
he said, "and these finds are doubly important due to the declining
oil supplies in the region."
more long-term, in the last decade 426 discoveries with 100 million
barrels of oil equivalent or more were found in 52 countries, with
108 different companies involved in the finds. During that time
Iran, Kazakhstan, China, Angola, Australia, Nigeria, Saudi Arabia
and the U.S. Gulf of Mexico accounted for the largest number of
since 1998 over 40 percent of the discoveries greater than 100 million
barrels of oil equivalent were in deep water. The number of large
deepwater discoveries peaked in 2002.
this might seem like good news, Stark indicated there are reasons
to be concerned about the state of exploration.
look at global discoveries in five year increments, through 1980
every five-year period except one right after World War II added
more resources than were brought on stream," he said. "That trend
reversed during 1984. Since then, annual worldwide liquids consumption
has exceeded new liquids discoveries. The petroleum industry, fortunately,
has added sufficient new reserves by coaxing more oil from older
fields or already discovered but undeveloped fields to offset consumption.
point, exploration must once again contribute a larger share of
new reserve additions," he said.
numbers from 2000 forward illustrates the seriousness of this situation,
2000 IHS recorded 40.5 billion barrels of oil equivalent from
2001 the total was 18.9 billion.
2002 the total was 13.4 billion.
2003 the total was 11.4 billion, although at year-end there were
still about 90 discoveries for which the firm did not yet have
oil and natural gas liquids production is right at 27 billion barrels
of oil a year, and the industry has not come close to replacing
that production in years," Stark said. "Even in 2000 the liquids
portion of the total 40.5 did not equal the 27 billion barrel production
level, totaling only around 25 billion barrels of liquids."
Stark said 1991 was the only year since 1985 that new discoveries
topped liquids production.
trend is the increasingly important role of natural gas liquids.
Activity on Australia’s northwest shelf and in the Persian
Gulf are indicative of this trend, since both of these areas have
gas rich in liquids, he said.
give these operators their profits and then they can play the LNG
game with minimal risk," he said.
prices and market situations will be critical for the exploration
still faces some paradoxes," he said. "We will see a significant
amount of excess capacity growth in liquids over the next five years
— almost four million barrels of oil equivalent per day of excess
capacity more than even robust demand growth. It will be difficult
for OPEC to cut back its production in the face of this capacity
growth and maintain prices in its $22 to $28 target range."
complicating factor could be the lifting of sanctions in countries
such as Iraq and Libya.
have a huge resource base of discovered but undeveloped large fields,"
he said. "All these factors will contribute to supply and price
uncertainty and volatility, which hampers companies interested in
investing substantial funds in exploration."
other hand, we see a growing number of companies who feel acquisitions
and mergers have become more expensive and some firms, particularly
large independents, are demonstrating growth through investment
in exploration," he said.
these factors, both negative and positive, add up to a murky future