Exploration activity over the last decade has been impacted by two major oil price crashes and a global pandemic, which have resulted in large fluctuations in drilling costs, exploration performance, and discovered volumes.
Despite all of that, and the maturity of the Norwegian Continental Shelf (NCS), Norway continues to be a global hotspot for exploration.
An extensive infrastructure base, fiscal incentives for exploration, and a wide range of plays in four distinct basins have attracted multiple explorers to the region. The country does, however, continue to mature and this has been evident by fewer high-impact discoveries and decreasing average discovery sizes.
Westwood noted in its ‘Norway State of Exploration’ report the activity and performance of exploration wells that have been drilled on the NCS between 2012 and 2021, as well as the results to date for 2022. This report also provides an outlook for the remainder of the year.
As per the report, a total of 298 exploration wells were drilled between 2012 and 2021 in Norway with an estimated total exploration spend of $15.4 billion. Exploration performance has fluctuated over the 10-year period, but the average commercial success rate was 24 percent, and the technical success rate was 49 percent.
Westwood stated in the report that 71 commercial discoveries were made with total resources of 3.3 bnboe, at a drilling finding cost of $4.6/boe while only six commercial discoveries were under 100 mmboe, reflecting the decreasing discovery size as the NCS matures.
The Northern North Sea was the top performing basin on the NCS in terms of commercial success (34 percent) and discovered volumes that stand at 1.1 bnboe. The Barents Sea has continued to disappoint in terms of commercial success and the number of discoveries made, however, it has delivered over 1 bnboe of commercial resources at the lowest finding cost.
The most drilled and best-performing play in terms of commercial success and discovered resources was the Middle Jurassic with 1.7 bnboe from 91 wells and a commercial success rate of 36 percent.
Infrastructure-led exploration drilling accounted for around 60 percent of all activity and spending and contributed 2.1 bnboe with a commercial success rate of 35 percent. The proportion of such drilling is expected to trend upwards as companies look to sustain production levels in older hubs and have an increasing focus on lower-risk, short-cycle opportunities.
There were only 13 discoveries made from high-impact wells between 2012 and 2021, giving a commercial success rate of just 11 percent. The total resource discovered was around 1.5 bnboe, however, 65 percent of this was discovered in the early part of the decade in the Barents Sea.
In total, over 80 companies participated in exploration drilling, 36 of which participated in 10 or more wells. Most successful companies have either been involved in the high-impact discoveries of the decade or have targeted the more successful plays such as the Middle Jurassic.
Exploration portfolios focused on infrastructure-led exploration delivered more consistent performance, with higher commercial success rates and lower finding costs but with smaller average discovery sizes. Exploration success that can be brought onstream quickly remains attractive.
Despite the maturity of the NCS and recent global events, exploration activity is expected to remain buoyant. Westwood’s current expectations for 2022 are that 35 exploration wells could be drilled, targeting total resources of 2.5 bnboe. Going forwards, however, more companies are likely to focus on lower-risk infrastructure-led drilling to sustain production levels in existing hubs and that can provide short-cycle opportunities.
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