After three years of deepwater exploration in the doldrums, the big international oil companies are resuming their offshore exploration efforts with lowered costs and highly selective smarter choices for drilling areas, as oil prices have recovered from last year's $30-per-barrel-lows.
According to managers from major companies who attended the CERAWeek industry conference in Houston this week, the oil price recovery, low service costs, and the companies' slashed costs and streamlined operations will be manifesting in increased exploration activity, following more than two years of downturn.
"Our competition over the past years has evolved from 'we want to be the best in deepwater' to 'we want to compete with shale' to 'we want to beat the Permian'," Royal Dutch Shell's executive vice president for deepwater, Wael Sawan, told Reuters in an interview.
The manager also noted that his company had cut well, logistics and staff costs to such an extent that some project developments in the Gulf of Mexico and Nigeria would turn in profits at oil prices below $40 per barrel.
In addition, not only Shell, but all companies, are picking developments in areas near existing sites and fields to cut costs and increase chances of discoveries, and those areas are mostly found offshore Brazil, in the Gulf of Mexico, and Southeast Asia.
"It is a very selective, sniper focus," Sawan told Reuters.
Related: U.S. Shale Kills Off The Oil Price Rally
The cut in upstream investments over the past couple of years, especially those in costly large offshore projects, could lead to a shortage of oil supply in a few years, the International Energy Agency (IEA) said earlier this week.
In its forecasts on the 2017 global oil and gas exploration market, energy consultancy Wood Mackenzie said in December that it expected exploration to return to profitability in 2017 after five years of only single-digit returns.
"Smarter portfolio choices and lower costs are already paying off," Dr Andrew Latham, vice president of exploration at Wood Mackenzie, noted.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More