During 2013 and 2014, global offshore exploration activity, measured in investments, peaked at US$~70 billion, representing a 40% increase compared to the 2009 level. Despite the growth in investment, the yearly global discovered offshore volumes decreased during this same period. In 2010 ~30 Bboe of new offshore resources were discovered, while in 2014 the number was reduced to ~9 Bboe. The trend seems to continue into 2015, with 4 Bboe of discovered resources during the first six months of the year. The main discoveries of 2015 have been the Tortue West gas discovery in Mauritania and the Cheek oil discovery in Mexico.
In terms of discovered volumes over the last decade, two regions stand out: South America and Africa. South America is driven by the exploration success in Brazil, where Petrobras and other companies have opened up a new frontier by targeting sub-salt prospects. In Africa the new volumes primarily come from exploration success in Mozambique and Tanzania.
From 2005 to 2014, the yearly investment related to offshore exploration increased from US$25 billion to US$68 billion. The increase in investment is a combination of higher activity as well as inflation. In 2005 the average cost per exploration well was US$34 million; by 2010 the same costs had increased to US$75 million and again to US$95 million by 2014. Rising unit costs and lower exploration performances have resulted in lower profitability for exploration. The average discovery cost per boe for the years 2008- 2012 was US$2.5/boe, which was surpassed by US$7/boe in 2014.
The disappointing exploration results that we have observed over the last couple of years are important to reflect on. If exploration is going to be commercial at a time of low oil prices, the trend needs to be turned. Based on experience, frontier exploration has proven successful and may be one way to turn around the current trend.
