Energy transition acceleration did not derail oil & gas exploration in 2021, Westwood says

Amid ever-increasing calls to phase out fossil fuels and pivot toward clean energy sources, oil and gas exploration activities remained resilient in 2021 undeterred by the accelerating energy transition, reveals Westwood Global Energy, an energy market research and consultancy firm, in its latest report.

Westwood informed on Thursday within its latest analysis that high-impact oil and gas exploration drilling in 2021 maintained its momentum, in spite of challenges due to COVID-19 and the energy transition, which is sweeping over the sector.

Graeme Bagley, Head of Global Exploration and Appraisal at Westwood said, remarked: “The results of our latest State of Exploration report present a promising outlook for exploration, having bounced back from COVID-19 and despite significant headwinds against exploration for fossil fuels. As we stride towards a cleaner energy mix, however, the crucial requirement is for low emissions intensity developments for all future exploration opportunities.”

As explained by the research firm, even though high impact drilling levels in 2021 were similar to 2020, performance sank significantly, with discovered resources dropping 65 per cent in 2021 to 6.7bnboe. In addition, the commercial success rate fell 11 per cent year-on-year, from 40 per cent to 29 per cent. Westwood explains that this is due to a reduced number of giant discoveries >500mmboe and some unsuccessful play extension tests in recently opened emerging basins.

Westwood research shows that companies with a significant proportion of infrastructure-led exploration in their portfolios delivered a higher commercial success rate and a more predictable finding cost, despite lower discovery sizes. Moreover, access to funding meant that supermajors and NOCs, together accounted for 68 per cent of high impact well equity in 2021 compared to 47 per cent in 2018.

“Looking ahead, we’ll be seeing scrutiny of the success case impact on company net-zero targets, with ESG considerations and the time to break-even becoming increasingly important when it comes to prospect selection,” concluded Bagley.

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