The global energy industry faced a challenging year in 2023, with high impact exploration drilling declining by 21% according to the latest analysis from Westwood Global Energy Group. Despite favourable oil prices, various factors such as energy transition strategies, industry consolidation, rising well costs, and reduced activity in former hotspots contributed to this decline.
The report also revealed a decrease in the commercial success rate by seven percentage points compared to the previous year, marking the lowest rate since 2018. The average discovery size saw a significant drop from nearly 500mmboe in 2019 to around 220 MMboe in 2023, the smallest since 2014. Additionally, overall drilling finding costs have surged by a factor of six since 2019 to $1.2/boe. The commercial success rate in frontier plays returned to less than 10%, the long-term average.
Despite these challenges, there is still optimism in the industry, particularly highlighted by recent discoveries in Namibia’s Orange basin. These discoveries emphasize that significant volumes of oil and gas remain untapped, with faster cycle times for oil discoveries compared to gas.
Graeme Bagley, Head of Global Exploration and Appraisal at Westwood, noted that while there is still an appetite for exploration, energy transition strategies are reshaping companies’ approaches to replenishing their reserves. Industry consolidation and new technologies are also playing crucial roles in this evolving landscape.
Overall, the energy industry is navigating through a period of change and adaptation, with the need to balance exploration efforts with sustainability and efficiency in the face of evolving market dynamics.
