New wells drilled in South America in 2014 contributed to 8% of new wells globally in the offshore sector and 4% in the onshore. And according to Norway-based Rystad Energy, activity has been on a downward trend since then, following the slump in oil prices in late 2014 and the following year.
“Onshore drilling activity had a steep drop in 2016 before stabilizing, while offshore drilling activity saw a relatively smoother decline,” Rystad Energy said. “The number of new wells drilled in the region was hit again in 2020 with a 50% decrease recorded compared to the previous year, as the outbreak of Covid early in the year wreaked havoc on global markets.”
Drilling activity in South America in 2020 represented only 2% of global onshore activity and 3% of offshore.
The independent energy research and business intelligence company said the number of new wells has since increased due to the return of demand and the oil and gas price increase. Activity is expected to peak this year before going on another downward trend towards the end of the decade, partially due to Brazil having very low discovered onshore volumes in the last six years, making it difficult to support long-term growth.
“Offshore drilling activity in the region will remain at around 6% of global activity over the coming years, while onshore drilling will remain at around 3%,” Rystad Energy said. “It should be noted that, while the offshore well count in the region is significantly lower than that of onshore, offshore production makes up nearly half of South America’s current output and is expected to exceed onshore production by 2024 due to increases in Brazil and Guyana.”
While Rystad Energy expects shale and tight oil to supply most of the production growth through 2025, deepwater developments in Brazil and Guyana are becoming increasingly important.
“These countries are committed to growing production and improving the standard of living for their citizens,” said Matthew Hale, Lead Analyst, Energy Service Research at Rystad Energy.
Guyana remains the global leader in total offshore discoveries since 2015, with 11.2 billion barrels of oil equivalent, amounting to 18% of discovered resources and 32% of discovered oil. Of the total, a whopping 9.6 billion barrels are oil, far outpacing the US in second place with a comparatively small 2.8 billion barrels.
The Stabroek Block accounts for all of these finds, but recent discoveries in other areas show the potential for growth elsewhere.