Why explorers are not targeting more gas in response to the energy transition?

Why explorers are not targeting more gas in response to the energy transition? – Analyst asks

Mar 22, 2021 News

Kaieteur News-Analyst with Global E&A, Jamie Collard, says that, there has been much talk about natural gas as a transition fuel, primarily in helping to lower emissions and pollution.
But is there any evidence that explorers are now targeting more gas in their exploration programmes? “Not yet,” Collard wrote in a March 18 article. “In fact, 2021 is expected to see the lowest proportion of high impact exploration wells targeting gas in more than a decade.”
Collard indicated that overall, 32% of high-impact wells targeted gas prospects in 2011-2019, with the highest proportion was in 2019. He explained that this was due to drilling campaigns by BHP in deepwater Trinidad; BP in Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-Conakry (MSGBC) and Exxon/Eni in the Eastern Mediterranean.
“There were also slight increases in 2014 and 2015 as East Africa was drilled out; however, oil has remained the primary target throughout the period accounting for 2/3s of high-impact exploration wells,” Collard said.

[From left to centre] High-impact wells drilled annually for 2011-2020 and a projection for 2021. These phase target is as reported by the company or interpreted by Westwood
[Right] High-impact discovered resource 2011-2019 and 2020, and the risked estimate for high-impact wells expected in 2021.
Source: Westwood Wildcat Service

He added that 2020 saw a number of, primarily European, exploration companies changing their strategy in response to the energy transition. This included commitments to reduce emissions from combustion of their products and emphasizing the role of natural gas.
Collard explained, however, that these changes in strategies are yet to be reflected at the exploration drill bit. He stated that in 2020, 71% (52) of high impact wells targeted oil prospects, with the focus on offshore Brazil, Suriname-Guyana, the Norwegian Barents and the US Gulf of Mexico. Only the Nile Delta saw more than three high-impact wells targeting gas, he highlighted.
“So why is gas exploration not proving more popular during the energy transition?” the Analyst asks.
Firstly, he explained that most of the world’s exploration and production companies have not yet committed to reducing their scope three emissions. Therefore, these companies not specifically targeting natural gas exploration as part of energy transition strategy. He noted too that the focus is still on near term targets of reducing Scope One and Two (operational) emissions to maintain a licence to operate.
Secondly, Collard wrote that more than 60% of the discovered resource in 2012-2020 was gas, even though 70% of high-impact wells were targeting oil. This, he says, was due to a number of giant gas discoveries, as well as the industry discovering gas in plays where oil was the primary target.
“In fact,” Collard details, “the industry has already found more natural gas than it needs or can commercialize in current market conditions.Thirty-six billion barrels of oil equivalent of gas discovered 2008-2016 remain in the ground with no current plans for development. The exploration for gas that is happening now is focused on plays where the route to market is clearer, but big gas prospects with access to an attractive gas market that can be commercialized quickly are hard to find.”
It is until this equation changes that explorers will still tend to favour oil, the Analyst concluded.

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