Upstream companies, or those involved in the production and extraction of oil and gas, are beginning to adjust to a new reality where oil prices are expected to remain higher for a longer period. In this environment, factors such as OPEC+ production and US shareholder returns are becoming as important as the actual flow of oil in determining drilling decisions. While there have been some significant oil discoveries in 2022, including the Venus find off the coast of Namibia, the overall amount of new reserves found is still much lower compared to the levels of upstream activity seen in 2014 and 2015. Despite this, exploration activities are expected to bring new discoveries in 2023, and these top 5 exploration prospects are considered the most likely to impact the market.
- Zhenis (Kazakhstan)
One of the most promising offshore drilling projects for this year is located in Kazakhstan and was jointly developed by Lukoil and a local partner. The project, known as Zhenis, was initially delayed due to the COVID-19 pandemic and the uncertain financial situation of Lukoil. Zhenis is located in the southernmost part of Kazakhstan’s offshore area, near the border with Turkmenistan, and is considered a high-risk project due to its location. However, the potential rewards are also considered high, as the area has significant resources and the exploration drilling could potentially lead to the discovery of a new, previously overlooked basin. The first drilling, which is taking place in water depths of 75-100 meters about 80 kilometers from the Kazakh coast, is currently underway, and the initial results are expected to be available in a few months.
- Aurora (Namibia)
Namibia’s offshore waters saw the largest oil discovery of 2022 with the first-ever deep-water wildcat drilling in the region, resulting in the Venus find. The discovery has been compared to ExxonMobil’s 2015 Liza discovery and was followed by Shell’s Graff discovery in a separate exploration well. These developments have attracted the attention of other producers, who are planning to drill their own wells in other license blocks. Maurel & Prom, a French company specializing in African upstream operations, is expected to begin drilling the Aurora wildcat this year in shallower waters (1250 meters deep) that are located further out at sea (190 kilometers from Walvis Bay). Geologically, Aurora is expected to be similar to Venus as it is located in the license block just above TotalEnergies’ 2913B block. If the exploration well is successful and commercial volumes of oil are found, it is expected to be a significant find.
- Walker (Suriname)
The oil-rich Guyana-Suriname basin has received attention due to the numerous discoveries made in Guyana’s Stabroek block. However, Suriname has had less success in finding new reserves, particularly after the Rasper well in Block 53 failed to produce any oil. This year, the drilling of the highly anticipated Walker prospect in Shell-operated Block 42 is expected to take place. The prospect, which was previously headed by Kosmos Energy before being sold to Shell, is believed to potentially contain up to 250 million barrels of oil equivalent. One potential challenge is its location further out to sea compared to other major discoveries in the basin. If the drilling confirms the presence of commercial quantities of oil, it could lead to the opening of a new frontier and future exploration moving further into the offshore zone rather than remaining near the maritime border with Guyana.
- Ephesus (Canada)
The Cape Freels exploration well, located about 400 kilometers from the coast of Newfoundland and Labrador, has been the subject of much discussion in Eastern Canada since at least 2019. Initially believed to contain 4-5 billion barrels of oil and gas, potentially double the size of the nearby Hibernia field, the well was delayed by the COVID-19 pandemic and subsequent restrictions on capital investment. The well has now been renamed Ephesus and BP is planning to drill it over the summer. While it is believed that oil is present at the site, the question remains whether it will be commercially viable to extract oil from the ultra-deepwater unit, which has a total depth of almost 5 kilometers. If the well is successful, it could provide a much-needed boost to Eastern Canada’s oil prospects.
- Argerich (Argentina)
Argentina has made significant progress in developing the shale oil deposits of Vaca Muerta, but has not had any major new discoveries until now. Norway’s Equinor is preparing to begin drilling the Argerich exploration well, the first deepwater offshore well in Argentina, located 300 kilometers off the coast of Mar del Plata. The well, located in water depths of over 1500 meters, will be drilled to a total depth of more than 4000 meters. The project, a joint venture between Equinor, YPF, and Shell, has faced regulatory obstacles due to concerns from environmentalists. However, recent images of oil seeps in the area of the CAN-100 license block suggest that there is a functioning hydrocarbon system present, and the companies hope to find conditions similar to those of the Venus discovery in Namibia.