All eyes on the Caribbean as replacement ratio dips to the lowest in decades
Oil and gas companies have discovered 7.7bn boe year-to-date, according to Rystad Energy’s latest global discoveries report, and the industry is well on track to repeat the feat achieved in 2018 when around 10bn boe of recoverable resources were discovered.
Russia has seen the most discovered resources so far in 2019, with the Dinkov and Nyarmeyskoye discovery announced earlier this year holding around 1.5bn boe of recoverable resources. Guyana and Cyprus nab the other places on the podium.
The so-called resource replacement ratio for conventional resources now stands around 16%, which is the lowest seen in recent history.
‘This means that only one barrel out of every six consumed is being replaced by new sources. This is the lowest replacement ratio we have witnessed in the last two decades,’ says Palzor Shenga, Senior Analyst on Rystad Energy’s upstream team.
However, the industry has high hopes after the prolific success of ExxonMobil’s Stabroek block off the coast of Guyana and more recent discoveries by other operators in the region, which have led to a surge in offshore exploration in the Caribbean. More acreage is being made available for bidding, with some countries conducting their first-ever licensing rounds in 2019 and 2020.
Offshore drilling activity has been on a steady rise in recent years, with 23 new exploration wells expected in 2019. By comparison, only seven offshore wells were drilled in 2013.
‘We estimate the annual number of wells drilled could increase slightly to 25 wells in 2020, as more operators join the Caribbean exploration circuit,’ says Santosh Kumar, an exploration analyst on the upstream team.
Rystad Energy anticipates there will be further planned wells in both Guyana and Suriname. The basin is considered to be one of the most underexplored basins in the world and could get a facelift from current assigned volumes if hydrocarbons are established towards the east.
‘Explorers have set their sights on establishing a working petroleum system and unlocking the underlying commercial prospectivity of the basin. The latest update suggests that the basin could have a potential of around 13bn boe,’ Shenga says.
A wildcat exploration campaign led by Apache is currently underway in Guyana’s eastern neighbor, Suriname. Prior to this, only 14 wells have been drilled in the Guyana-Suriname Basin beyond water depths greater than 20 metres.