This is unfortunately the all too obvious conclusion in a study made by Anders Wittemann in Wittemann E&P Consulting (“WEPC”).
– I checked reserve estimates for some 40 NCS fields that have come on stream since 2010, Wittemann says.
– It appears that the reserves estimates at time of PDO – on average (unweighted) – is almost 20% higher than after production start-up.
As illustrated in the graph, the range is wide, from almost 100% higher (Edvard Grieg) to almost 100% lower (Oselvar). The bulk of the fields do have a negative reserve growth. Some few exceptions occur, for example as Edvard Grieg, Vega, Gudrun and Johan Sverdrup all have increased their reserves.
Source: NPD, WEPC research, analysis and F&D Asset Table
– Comparing estimates at PDO and after production start, should be for a fixed development concept. Edvard Grieg, for example, has around 50 MMboe reserve increase due to new infill wells in 2021, and these were probably not included in the original PDO, Wittemann explains.
– The Johan Sverdrup PDO includes both phases of development, so this increase is not due to phase 2.
The good news is that the absolute values, in contrast to percentages, show a significant overall increase in reserves after production start-up, and from the graph we can see ourselves that this is due to the very positive increase in the four fields mentioned above. Altogether it amounts to some 860 MMboe vs. the combined reserves downgrades of 690 MMboe.
– The reasons for reserves estimation missing the targets would have a variety of reasons. Although projects are likely robust even with downgrades of 60%, the investments could have been better spent on other projects.
WEPC’ inventory of “PDO by 2022” candidates, those that could benefit from the temporary tax changes introduced in 2020, includes 53 projects, of which at least 30 already are sanctioned or will be before end of 2022, with most of the others later. The combined resource base is 4,700 MMboe, with an average size around 90 MMboe. Future reserves revisions will likely continue for these also.
The striking difference «before and after» is a topic that will be addressed at NCS Exploration Strategy next week . In the session Exploration Performance and Value Creation at NCS Exploration Strategy,November 17-18 , Camilla Aamodt (Equinor) and Arild Dybvig will moderate a panel discussion including Anders Wittemann, Kjersti Dale Grov (NPD) and Linn Katrine Høie (Petrolia NOCO).