Exploration Outlook: Key Oil, Gas Prospects to Watch Post-COVID

Though spending cuts and the coronavirus pandemic have slowed the pace of oil and gas exploration this year, activity hasn’t ceased and discoveries are being made.

So far, there have been about 17 potentially commercial discoveries recorded this year from high-impact prospects targeting more than 100 million barrels of oil equivalent or frontier plays, according to Westwood Global Energy Group. The latest include the Türkiye Petrolleri Anonim Ortaklığı-operated Tuna-1 gas discovery in the Western Black Sea and Apache Corp. and Total SA’s Kwaskwasi-1 oil discovery offshore Suriname.

There have also been some failures.

“The first quarter of 2020 was actually the busiest quarter for high impact well completions since 2014. It’s showing the appetite for high-impact exploration really returning,” Westwood senior analyst Jamie Collard said during a webinar Aug. 26. “However, with COVID, we’ve already seen a drop in high-impact activity.”

Westwood data show there have been 53 high-impact completions, 12 wells are currently drilling and 15 are considered firm wells for the rest of the year.

“That takes us to a base case of 80 high-impact exploration wells in 2020. So, this is probably going to be a drop of around 20% on last year,” Collard said. “However, it’s still an improvement from what we saw between 2016 and 2018.”

Pre-COVID analysts had expected an increase of 10% in 2020 compared to 2019. Drilling plans for 2021 are “still quite fluid at the moment,” he added.

However, there is still plenty to see this year—if companies proceed with exploration plans.

Westwood has tagged several key wells to watch this year. Collard and senior associate Helen Doran highlighted some of these exploration prospects and shared their insight.

Australia, Ironbark

Operator: BP Plc

Highlights: Located in a proven play offshore Australia, the deep prospect—which partner Cue Energy Resources Ltd. said has a 15 Tcf potential—will test the mature Triassic Mungaroo Formation in a large fault block. Westwood pointed out that several previous operators have walked away from the prospect before even spudding a well.

Thoughts: “What’s quite interesting at Ironbark is that the reservoirs lie more than a kilometer deeper than those found at Gorgon and reservoir quality does appear to be one of the key risks alongside seal effectiveness,” Collard said. “So, if a 15 Tcf gas discovery is made, it will be one of the largest offshore Australia,” ranking in the top five. The well’s scale makes it a key well to watch, he added.

Gulf of Mexico, Xakpun

Operator: CNOOC Ltd.

Highlights: Considered a key play test offshore Mexico, the Xakpun prospect takes aim at the subsalt Eocene Upper Wilcox play in an unknown trap, Westwood said. The well is being positioned in the Salina del Bravo Basin, which is southwest of elongated folds of the Perdido. Its potential has been put at nearly 1 Bboe by Mexico’s oil regulator CNH, or the National Hydrocarbons Commission.

Thoughts: Doran said the well will penetrate more than 2,500 meters salt before reaching the Paleocene-Eocene reservoirs, which are about four and a half kilometers below mudline. “It’s a high-pressure, high-temperature well. I believe it’s the largest volume of salt being penetrated by a well in this area. … Should the well encounter good reservoir, the high-pressure conditions, it provides a lot of encouragement for the remaining drilling out of Salina del Bravo,” she said.

Gulf of Mexico, Galapagos Deep

Operator: BP Plc

Highlights: Located in the Mississippi Canyon area of the U.S. Gulf of Mexico, the Galapagos Deep prospect is considered a key frontier test in the mature basin. Collard said the play is already proven onshore and there was a technical discovery in the Cretaceous Tuscaloosa play at the Davy Jones No. 2 well in 2010. Many of the previously drilled wells have targeted the Upper Jurassic Norphlet play, he said. But this test focuses on the frontier Upper Cretaceous Tuscaloosa clastics in a large four-way closure. Citing partner Hess Corp., he said the prospect has a potential of more than 1 Bboe, with running room.

Thoughts: “The well has been optimally placed to target pretty much the thickest reservoir interval in this entire play,” Doran said. There are some risks. These, she said, include complexity around charge access to the structure. In addition, “the asymmetrical nature of the structure doesn’t reduce a trap risk in the updip northern portion where it’s unclear if the prospect is still within structural closure.”

South Africa, Luiperd

Operator: Total SA

Highlights: This Outeniqua Basin prospect offshore South Africa is testing commerciality for the Brulpadda discovery made in 2019, Collard said. Brulpadda is considered potentially commercial, “although it looks likely that there will need some follow-on discoveries made to actually confirm commerciality.”

The Luiperd prospect is testing “emerging Lower Cretaceous Albian age basin floor fans in a stratigraphic trap,” according to Westwood. Total plans to drill the Blaascp prospect just east of Luiperd afterward.

Thoughts: “I do believe gas remains a significant part of this play across the play fairway,” Doran said. “The key for me really is understanding the contribution from the syn-rift source rock.”

Namibia, Venus

Operator: Total SA

Highlights: Venus, located offshore Namibia in the Orange Basin at a depth of more than 3,000 meters, has the potential to be a frontier basin opener with multibillion-barrel potential, according to Westwood. While the basin has a long exploration history dating back to 1974 with a gas discovery, the area hasn’t seen any FIDs, Collard said. “The South African side does actually have more wells drilled but only one well in the deep water which came in dry,” he said. “The Venus prospect is testing Lower Cretaceous clastics in a basin floor fan prospect in a combination trap.”

Thoughts: Doran described the prospect as a significant step-out along a magma-rich margin with significant risks. Total and partner Qatar Petroleum are targeting the Lower Aptian/Albian, and “there’s a lot of uncertainty about the thickness and quality of the system in this deepwater part of the basin.”

Angola, Ondjaba

Operator: Total SA

Highlights: At more than 3,600 meters, the Ondjaba well offshore Angola will be one of the deepest wells ever drilled, Collard said, noting plans are to spud the well by year-end 2020 or early next year. “We’re looking at the industry trying to extend what’s already a prolific play much further outboard,” he said, referring to the Congo play.

Thoughts: The well will test the mature Oligo-Miocene turbidite play in ultradeep water, according to Westwood. “The key uncertainty really here is the maturation of that source rock. Not only is Ondjaba stepping out beyond the salt basin, it’s stepping into an area of a different lithosphere,” Doran said.

Brazil, Naru

Operator: Petrobras

Highlights: The Naru well was described by Westwood as a key play extension test for the Campos Basin offshore Brazil, testing maturing presalt Lower Cretaceous Aptian carbonates. It follows Royal Dutch Shell Plc’s dry Saturno well in the Santos Basin that also attempted to extend the play outboard, according to Collard. The Naru well is currently being drilled, he said.

Thoughts: “This is a great example for the industry of pushing play boundaries. It offers us a fantastic opportunity to really think about the risks of uncertainty relating to pushing play boundaries,” Doran said.

Moving from an inboard to an outboard area, explorers should understand that rifting is not instantaneous—it’s time transgressive, she said. Plus, “the magnitude of extension also increases from the inboard area to the outboard. … You’re moving from stretched to stretched and thinned to hyperextended crust in the more distal parts of the margin.”

She also noted, among other observations, that rifting mechanics also change. “We move from very brittle extension in normal salting in the inboard section to ever-increasing ductile uncoupled deformation in the onboard where faults start to cut into just not the crust, but into the lithosphere.”

Suriname-Guyana, Sloanea and Tanager

Operator: Exxon Mobil Corp. (Tanager) and Petronas (Sloanea)

Highlights: Exxon’s Tanager well, northeast of the Ranger well on the Stabroek Block offshore Guyana, will be the first test of the Liza play on the basin floor and could extend the play north, according to Westwood. Petronas’ Sloanea, in Block 52 offshore Suriname, could extend the Liza play upslope and farther east.

Thoughts: Although both wells are targeting the same Upper Cretaceous play, Doran said the two are very different play extension tests with contrasting positions. Tanager is in the Upper Jurassic Oceanic Crust with Albian Cenomanian Turonian source rock. “The key risk for Tanager includes the volume of quality reservoir in this very distant location,” she said.

Sloanea, she explained, sits on the extended part of the margin near the Demerara rifted continental crust and above a thick Jurassic syn-rift graben. “Vertical charge from that graben is expected,” potentially contributing to a “higher maturity higher GOR fluid and perhaps similar to the reported fluids that we’ve heard about with the Apache and Total discoveries.”

She later added, “the two wells, should they come in, will perhaps mark extremities of the play that we can expect in this basin. Looking forward to seeing the results of those.”