Suriname Makes Cut in Downsized Chevron Exploration Queue

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Exploration may play a quiet role in Chevron’s strategy these days, but its recent successful bid for a shallow-water block offshore Suriname shows its appetite for fresh prospects remains. Chevron executives uttered the word “exploration” just four times during the company’s multihour annual strategy update in March, with no details given around spending or plans (OD Mar.11'21). The lack of detail, however, was more a reflection of what investors are most interested in these days -- capital discipline, carbon intensity and shareholder returns -- than an indication that exploration has no role in Chevron’s strategy. Instead, its award of Block 5 in Suriname’s latest bid round speaks to a continued interest in exploration -- including frontier exploration -- even if the scope of its ambitions has shrunk considerably (OD Jun.21'21). Chevron tells Energy Intelligence that it will spend $750 million on exploration globally this year. That’s a small fraction of the $3 billion-plus it used to spend annually -- although its overall capital expenditure has also fallen by about two-thirds from all-time highs (OD Mar.31'11). A spokesman says Chevron has 25 exploration and appraisal wells planned for 2021, with exploration investment broadly centered in the Gulf of Mexico, Brazil and the Eastern Mediterranean. Included in that well count are eight conventional wells Chevron deems “high-impact,” meaning they carry a gross unrisked resource potential of more than 100 million barrels of oil equivalent. Of course, drilling won’t take place on Suriname’s Block 5 anytime soon. The bid round terms only include an initial commitment to acquire 3-D seismic within two years, with a single well becoming required if the leasehold is extended another two years. But Chevron says it is nonetheless “pleased” with the award, which will replenish its holdings off the tiny South American country and give it a fresh opportunity to hunt for prolific volumes of oil and natural gas after previously striking out. The US major and partner Kosmos Energy relinquished their deepwater Block 45 last year after drilling a dry hole in 2018. Chevron still holds a 33.3% stake in the Royal Dutch Shell-operated deepwater Block 42. A noncommercial well was drilled there in 2018 under previous operator Kosmos Energy. Kosmos was gearing up to drill a second well this year before it opted to sell to Shell. A Shell spokeswoman tells Energy Intelligence the Anglo-Dutch major is not planning on drilling there in 2021. Chevron tells Energy Intelligence it will gain a 60% stake in Block 5 once the ink is dried on the new license, with Paradise Oil, a subsidiary of state Staatsolie, taking a 40% nonoperated interest. Casey Merriman, Phoenix

Exploration, Offshore Oil and Gas, Corporate Strategy
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