Rystad Energy concludes that the 2016 total offshore discovered liquids resources reached only slightly below 2.3 billion bbl, 90% lower than in 2010. This drop is most significant to the overall decline in discovered volumes; in fact, total global discovered volumes (oil & gas combined) are at an all-time low since the 1940s.
In 2016, the average liquid content in the discovered resources was merely ~40%. Even more tellingly, the replacement ratio* for liquids in 2016 was below 10%. For comparison, the replacement ratio for liquids in 2013 was as high as ~30%.
There are a few key countries that influenced offshore discovered liquids development:
Brazil – The country experienced a new ‘golden age’ thanks to multi-billion bbl discoveries made in the beginning of this decade. Among the largest discoveries Lula (formerly known as Tupi), Libra and Buzios stand out. Combined, these discoveries hold ~20 billion barrels of liquids. All of the large discoveries made in Brazil in the past decade are located in the large pre-salt basins, especially Santos and Campos. However, the success story from 2010 did not repeat itself as 2016 approached. This is due to a combination of factors such as limited capital to develop projects that were previously discovered or local content regulations, among others.
Norway – The offshore exploration on the NCS showed disappointing results in 2015 and 2016, with no discovery surpassing 100 million bbl of discovered resources. In fact, since the discovery of Johan Sverdrup in 2011, there has not been another sizeable discovery made on the NCS. Exploration results were particularly discouraging given the number of exploration wells in the region, which remained relatively stable within the range of 45 to 65 exploration wells per year, since 2010.
United States – In GOM, the discovered volumes have remained relatively stable compared to the development in other offshore regions.
Russia – In Russia, the largest discovery in the past years was Universitetskaya, discovered in 2014. This discovery could potentially hold over 2.3 billion barrels of resources, of which ~1 billion bbl are liquids alone. Russia continues to be dependent on foreign technologies to be able to develop its offshore discoveries, especially in the arctic areas. At the same time, exploration activities in offshore arctic regions are currently on hold due to sanctions and generally less interest in the investment-heavy exploration due to low oil price.
Angola – The past five years have been positive for Angola in terms of exploration results. In 2016, there were three significant discoveries made: Golfinho (operated by Sonangol), being the only large oil discovery; and Katambi and Zalophus (operated by BP and Sonangol, respectively), being the largest gas discoveries.
Guyana – Exploration results in Guyana were particularly encouraging in 2015, with the 1 billion bbl discovery – Liza. Liza was the largest oil offshore discovery made in that year, representing ~30% of the total offshore discovered liquids in 2015.
Rystad Energy expects the exploration activity to slowly pick up from 2018, allowing for more discoveries towards the end of this decade and beyond. At the same time, some of the recent license awards could open new prospective exploration regions, e.g. the deepwater license award in Mexico.
*The replacement ratio measures the amount of discovered resources during the year relative to the amount of liquids product in the same year globally. It disregards the production start-up date for the discoveries.