Emma Thompson
Tue, Aug 8, 2023 6:15 PM

Oil and Gas Discoveries Plummet to New Lows Despite High Spending

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Oil and Gas Discoveries Plummet to New Lows Despite High Spending
The oil and gas industry is experiencing a significant decline in discovered volumes, despite a surge in exploration spending. According to Norwegian energy intelligence firm, Rystad Energy, the first half of 2023 saw a 42% drop in discovered oil and gas compared to the same period in 2022. The decrease can be attributed to cautious strategies, failed wells, and a shift towards more profitable regions. While the future remains uncertain, the second half of 2023 is expected to bring a rebound in exploration activity.

The oil and gas industry has been eagerly exploring new frontiers to meet the increased demand for fossil fuels. However, recent industry data reveals a concerning trend - discovered volumes are plummeting to new lows, despite a surge in exploration spending. According to a report by Norwegian energy intelligence firm, Rystad Energy, the first half of 2023 saw a 42% drop in the discovery of oil and gas reserves compared to the same period in the previous year.

Rystad Energy's analysis reveals that only 2.6 billion barrels of oil equivalent (boe) were discovered in the first half of 2023, a significant decline from the 4.5 billion boe discovered during the same period in 2022. The number of discoveries also decreased from 80 to 55, with an average of 47 million boe per discovery - a decline from the 56 million boe per discovery in the previous year.

The decline in discovered volumes can be attributed to various factors. Exploration and production companies have exercised increased caution and shifted their strategies to target more profitable regions that are geologically better understood. This shift, combined with the failure of critical high-potential wells, has contributed to the steep drop in discovered volumes.

Aatisha Mahajan, Vice President of Upstream Research at Rystad Energy, commented on the current state of the industry, saying, "Upstream companies are facing a period of uncertainty. They are eager to capitalize on the increased demand for fossil fuels and find additional resources, but recent results have been lackluster. If exploration efforts continue to yield unimpressive results for the remainder of the year, 2023 could be a record-breaker for the wrong reasons."

As for the geographical distribution of discovered volumes, Guyana leads the way with 603 million boe, followed by Turkey with 380 million boe, Nigeria with 296 million boe, and Namibia with 287 million boe. The report also highlights that the offshore industry accounted for approximately 95% of exploration spending in the first half of 2023, but only about two-thirds of the discovered volumes.

While the decline in discovered volumes is a cause for concern, there is hope for a rebound in the second half of 2023. Rystad Energy predicts that exploration activity will gain momentum, as only 30% of the anticipated wells have been completed so far. Out of the remaining 56 exploration wells, 23 are either drilled or expected to be drilled this year, leaving scope for a potential rebound in future discoveries.

Despite the challenges, the six major oil and gas companies - ExxonMobil, BP, Shell, TotalEnergies, Eni, and Chevron - continue to invest in global exploration. Their combined spending is expected to reach $7 billion this year, approximately 10% higher than the previous year. Additionally, national oil companies hold vast subsurface resource bases, with over half of the projected exploration spending in 2023 coming from them.

While the industry navigates through uncertain waters, the second half of 2023 holds the potential for positive change. If exploration efforts pick up pace and yield favorable results, there is a possibility of a rebound in discovered volumes. As the world's energy needs continue to grow, the search for new oil and gas reserves remains a crucial aspect of the global energy landscape.

Source of content: OOO News 2023-08-08 News

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