Oil & Gas UK Economic Report 2015

7.2 Maturing Undeveloped Discoveries

Yet-to-find (YTF) volumes range between 6-16 billion boe, based on a cut-off rate of five per cent geological success. However, the central case across a range of geological success cut-off rates suggests a tighter range of 2-9 billion boe, which would appear to be a more realistic interpretation of likely exploration potential given recent performance. As shown in Figure 29, Oil & Gas UK estimates the range of ultimate recovery to be between 11.5-22 billion boe, based on currently available data and discounting the high case outcomes tabled by the OGA for PARs and YTF. The lower case reflects recent poor exploration success and limited maturation of existing PARS through to production. To achieve the high case of up to 22 billion boe, there will need to be significant improvements in near-field and frontier exploration success as well as concerted improvement in recovery, driven by successful cost reduction and efficiency programmes (see Section 5), substantial technological advances and widespread deployment of enhanced oil recovery.

A significant portfolio of discovered reserves has built up over the years that has been unable to attract capital for development. Wood Mackenzie estimates that there are currently more than 300 such discoveries without development plans comprising nearly 3.9 billion boe, the majority of which were discovered before 2000. As Figure 30 opposite shows, almost 80 per cent of these total reserves reside in accumulations of 50 million boe or less. Many of these opportunities are particularly difficult to develop, based on parameters such as reservoir accessibility, product quality or proximity to infrastructure. When typical commercial thresholds are applied, only 1.4 billion boe are currently considered potentially economically viable to develop, with over 2.5 billion boe currently deemed only contingent reserves. Given the limited lifespan of much existing infrastructure, it is imperative that the industry now rises to the challenge to find new ways to enhance the viability of these typically small opportunities, or they may never be recovered.

Figure 29: Estimated Total Resource Potential

25

YTF PARs Reserves

20

6

15

4

2

10

1.5

12

5

Reserves/Resources (Billion boe)

8

0

Low Outcome

High Outcome

Source: DECC, Oil & Gas UK

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ECONOMIC REPORT 2015

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