Consultancy Wood Mackenzie has forecast a return to profitability for oil and gas exploration next year thanks to sharp cost reductions, but said drillers will avoid exploration geared toward over-supplied LNG markets or in high-cost regions like the Arctic. In a report published Friday, Wood Mackenzie said deepwater well costs would fall to $30 million or less next year, with such drilling proving profitable over the development cycle at oil prices under $50/b. By comparison a single exploration well drilled by BP west of the Shetland Islands in 2012-13 is thought to have cost somewhere between $100 million and $200 million. Exploration “has a good chance of achieving double digit returns in 2017,” the consultancy’s exploration vice president, Andrew Latham, said. While exploration spending next year would only at best match this year’s level, “lower costs mean well counts may hold up close to 2016 numbers,” Wood Mackenzie said. […]