Economic Report 2017

E x p lor at ion h as ar guab ly b e e n h it t h e m ost b y t h e dow nt ur n w it h av e r age glob al sp e nd dow n b y alm ost 40 p e r ce nt in 2014- 16 com p ar e d w it h 2011- 13 acr oss t h e t e n b asins 23 e x am ine d as p ar t of t h e st udy . A lt h ough edžƉloration sƉend on the UK ^ Ĩell in line ǁith the aǀerage oǀer this Ɖeriod, it is one oĨ only three ďasins ǁhere technical reserǀes discoǀered haǀe increased, along ǁith gyƉt and the U^ GulĨ oĨ Dedžico͘

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Figure 25: Average Exploration Cost and Volumes Discovered, 2014-16

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Scale B ubble size = Av erage technical v olumes discov ered per y ear

UK D enmark E gy pt N orw ay N etherlands Angola B razil I ndonesia N igeria US ( GoM D eepw ater)

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5 Weighted Av erage D iscov ery Costs ( $ / boe) 10 15 2 0

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1 billion boe

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Av erage E x ploration Spend per Y ear ( $ B illion)

Source: Wood Mackenzie

T h e r e lat iv e m at ur it y and com p le x it y of t h e UK p r e se nt s st r uct ur al b ar r ie r s t o r e ducing cost s fur t h e r com p ar e d ǁith other oĨĨshore Ɖroǀinces ǁhere larger Ɖroducing Ĩields oĨĨer greater economies oĨ scale͘ ,oǁeǀer, the Ɖotential oĨ the UK remains edžciting, ǁith oƉƉortunities such as the Ĩractured ďasement Ɖlays ǁest oĨ ^hetland͖ ult r a- h igh - p r e ssur e h igh - t e m p e r at ur e p r osp e ct s in t h e ce nt r al Nor t h Se a; and t h e car b onife r ous r e sour ce s in t h e ^outhern Gas asin͘ Although, these oƉƉortunities are not oĨ the same scale as recent multiͲďillion ďarrel discoǀeries such as :ohann ^ǀerdruƉ ;Eorǁay, 2010Ϳ or ohr ; gyƉt, 201ϱͿ, and tend to come at a higher discoǀery cost, they can ďe easily ďrought to marŬet and monetised͘ T h e UKC S ne e ds t o e x ce l in t h e ar e as it can cont r ol and m aint ain a com p e t it iv e adv ant age . C om p anie s m ust cont inue t o m ax im ise v alue fr om ne ar - fie ld e x p lor at ion w h e r e it h as t h e adv ant age of b e ing ab le t o t ie - in t o edžisting inĨrastructure, as ǁell as taŬing adǀantage oĨ the edžceƉtional geological understanding in the UK͘

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23 UK, enmarŬ, Eorǁay, Eetherlands, Angola, ranjil, gyƉt, Indonesia, Eigeria and U^ GulĨ oĨ Dedžico͘

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