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by Graham Chandler on MARCH 8, 2012 market
The remarkable discoveries in Brazil’s far offshore Santos Basin over the past five years have lifted industry results, says Andrew Latham of global research and consulting firm Wood Mackenzie. He’s predicting strong growth not only in world conventional oil and gas exploration from 2011’s $60 billion+ spend but a healthy increase on the unconventional side, too, for 2012.
Led by the Santos Basin’s unprecedented 30 billion barrels discovered via just 32 exploration wells, the greater volumes of oil and gas being discovered worldwide are keeping finding costs down on a per barrel basis and increasing explorers’ full-cycle economic returns. Most successful of these basins in terms of volume found and value created are typically deep-water plays, many around the margins of the South Atlantic, Australia and India.
The Santos find dispels any notion that world oil prospects are rapidly diminishing. The story for gas is also positive, where conventional discoveries opened up in 2009 in the eastern Mediterranean and eastern Africa are now finding thirsty Asian markets; buoying explorers. The booming unconventional gas business in North America is following the trend.
Latham looks at volumes by year of discovery and sees an upward trend for both oil and gas. Today oil volumes are up, gas volumes are up—keeping discovery costs down and returns healthy. Companies will take encouragement from this wider success picture, whetting the majors’ appetites for exploration, reckons Latham.
See the full story and presentation, based on a Wood Mackenzie Exploration Service Insight published to clients in November 2011.