At least nine of the world’s top planned exploration wells for 2020 are at risk of being suspended as a result of the combined effect on oil and gas activities of the COVID-19 virus and the oil price war, a Rystad Energy impact analysis shows.
These wells, located in Norway, Brazil, the Bahamas, Guyana, the US, Gambia and Namibia would target a combined 7 billion barrels of oil equivalents (boe).
The wells that Rystad Energy has identified as candidates for suspension are at risk because of their commercial viability under the current price levels, shutdowns that affect the supplies of equipment components, operators’ prioritization among other targets and limitations in crew movements, among other reasons.
“Given the prevailing global situation we now foresee that the cumulative discovered volumes by the end of the year could go even below the 2016 level of 8.9 billion boe, which was the decade’s lowest. This will solely depend upon how many key wildcat wells will still see a spinning drillbit in the coming months, as some of them could be either suspended or postponed,” says Rystad Energy senior upstream analyst Palzor Shenga.
The first quarter of 2020 already started on a low note, as explorers have only uncovered new volumes of around 2.5 billion boe. The 22 discoveries are evenly split between onshore and offshore regions, with gas representing just over half of the volumes. Volumes are down about 40% from the same period of 2019, and the number of discoveries has almost halved.
“When we entered 2020, Rystad Energy believed that the global discovery trend would continue its upward trajectory with an expected increase in volumes. However, the current global market situation will bring many challenges to exploration,” the Norway-based energy research company said.
The understanding of the geological context and complexities of the subsurface remains unchanged – it is the unexpected market turmoil above the surface that will play the key role in the coming months, Rysatd Energy stated.
In announcing a 30 percent slash in CAPEX and a 15 percent cut in OPEX on Tuesday, US oil major ExxonMobil said while current production operations offshore Guyana remain unaffected by the COVID-19 pandemic and fall in oil prices, future activities can be delayed.