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ECONOMIC REPORT
2016
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Stranded Opportunities
The decline in exploration activity and lack of material exploration success means that many of the current
development prospects are not new – more than two-thirds of the associated reserves were discovered before
2000. However, without a significant change in the fundamental economics of these potential projects, either
driven by a rise in prices or a fall in costs, many will never be developed.
Figure 14: Development Status and Recoverable Reserve Base by Year of Discovery
0
1
2
3
4
5
6
1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Recoverable Reserves Discovered (Billion boe)
Undeveloped
Ceased Production
Under Development
Onstream
Source: Wood Mackenzie
Data provided by Wood Mackenzie indicate that up to five billion boe within known discoveries are currently
considered commercially unviable for development and categorised as PARs. Around 40 per cent of these reserves
are classified as unconventional, meaning the reservoir is high-pressure high-temperature (HPHT), heavy oil or in
deepwater and are therefore technically challenging, requiring significant capital investment to extract. Of the
conventional stranded discoveries, about 90 per cent are less than ten million boe in size and deemed too small
for commercial development. More certain access to infrastructure and the cost-effective deployment of existing
and new technologies will be vital to develop some of these small fields and is seen as a crucial opportunity by
both industry and the OGA.