It is a bit much to expect a potential game-changing event in a quarterly production and exploration report like that just issued by BHP Billiton (BHP).
But there it was — the LeClerc oil exploration well offshore from sunny Trinidad and Tobago was at a depth of 5771m at June 30.
That was just shy of its planned total depth, so we will all know soon enough if BHP’s bold push back in to conventional deepwater exploration at the bottom of the oil cycle has been a winner or not.
The potential prize is huge, even for a company of BHP’s size. LeClerc is one of the targets in what BHP hopes is a new deepwater oil fairway with the potential to become a tier 1 asset, or a 5 billion barrel oil-equivalent petroleum system, in industry parlance.
It is the exploration play where the excitement within BHP petroleum’s Houston head office is said to be palpable. But as BHP has warned previously, there are no guarantees of success.
Having said that, a duster at LeClerc won’t necessarily kill off the play.
BHP is excited enough by the prospective portfolio it has assembled beneath the deep blue waters to have planned a drill program there over the next three years.
What is more certain is that a big oil exploration success is just what BHP needs. The misery of the oil price collapse on BHP’s oil production expectations was on full display in the quarterly.
For the 2017 financial year, BHP’s guidance was that petroleum production would fall by 13-17 per cent to 200-210 million barrels of oil equivalent.
The main culprit is the US shale business, assembled back in 2011 and a business that would have absorbed close to US$40bn ($54bn) by now in investment for bugger-all return.
BHP guides that production from the shale business will plunge by 24-29 per cent to 77-83 million barrels of oil equivalent in 2017 as it focuses on “cash flow and value’’ by only drilling wells it can guarantee a decent return on.
It is not an ideal situation. But at least it can be said the oil isn’t going anywhere and can be turned back on when oil prices recover sufficiently.
That is happening in a small way now, with BHP comfortable enough to step up its completion of wells in US onshore to capture the high returns that the best of its acreage can deliver in a $US45-$US50 a barrel oil price window.
It is a hard grind for the foreseeable future.
Maybe so, but a good old-fashioned conventional oil “monster’’ like that targeted in the Caribbean would nevertheless work wonders for the spirits.