North-west Europe is experiencing a renaissance in high-impact exploration, a new report said.
But a combination of factors, including the imminent energy transition, mean global exploration may never recover to 2014 levels, Westwood Global Energy Group said.
Global exploration drilling increased by nearly 30% in 2018 compared to 2017, the research organisation said in its 10th annual report into the sector.
But performance was down, with fewer big discoveries and a lower commercial success rate.
Discovered volumes from high impact drilling fell by 50% in the 2014-2018 period, compared to the previous five years.
This year, high impact drilling is forecast to increase by 20% to around 80 wells, with more planned in mature regions, especially North West Europe and Mexico.
Supermajors participated in more than 50% of the high impact wells in 2018 − up from 34% in 2015 − and in excess of 70% of high impact wells so far in 2019.
Keith Myers, president of research at Westwood Global, said: “Whilst exploration is recovering, it’s from a very low base.
“There’s an acknowledgement amongst many exploration companies that it may never again reach 2014 levels.
“There are three main reasons for this. First, the quality of the drilling portfolio globally is declining overall.
“Despite improved drilling numbers there has been decrease in discovered volumes, average discovery size, and success rates.
“Second is the competition from the US onshore for reserves replacement capital.
“Third is the looming energy transition away from fossil fuels that is starting to impinge on exploration thinking.
“The competitive landscape is changing with the largest companies like Total, Equinor and Exxon now leading the way on conventional high impact drilling, which is forecast to increase by 20% this year.
“At the same time, mature regions such as North West Europe are seeing a renaissance, as explorers focus on trying to find more hidden gems.”
The report covers all high impact and frontier drilling, key discoveries of 2018, key plays explored and all frontier drilling.
Exploration performance trends were analysed using a benchmark group of 36 international E&P companies that participated in 756 conventional wildcat wells between 2014 and 2018, drilled at a cost of $28.3bn and discovering 22.4bnboe of oil and gas.