Offshore staff
LONDON – Wood Mackenzie expects operators in the Northwest Europe region to spud more than 60 offshore exploration wells this year, a 25% increase on the total for 2018.
The analyst claims that exploration budgets now provide more leeway for drilling, with many prospects identified. A large percentage is close to existing infrastructure, but the wells will also target new plays.
In total, the targeted resource amounts to around 10 Bboe.
Norway will lead the way, with more than 40 exploration wells forecast, up from 26 last year. In the UK, 10-15 wells look likely, up from the eight wells drilled last year, the lowest total in the sector since the 1960s.
Wood Mackenzie highlightedSiccar Point’s Blackrock and Lyon wells west of Shetland as ones to monitor.
Leading the way will be Equinor, which has plans to drill around 20 wells across the UK and Norwegian sectors, its highest tally since 2013. Then come Aker BP and Lundin as they look to secure longer-term growth offshore Norway.
As for development expenditure, the analyst anticipates total spending this year in the region of more than $24 billion on projects, with Norway and the UK respectively accounting for $16 billion and $7 billion of the investments.
Total’s program for redeveloping the Tyra hub should also generate a significant increase offshore Denmark.
There could be final investment decision (FIDs) for 23 North Sea projects: 12 in the UK, nine in Norway, one in the Netherlands, and one in Denmark. Emerging North Sea players will account for 80% of the FIDs.
Wood Mackenzie forecasts total North Sea production this year of 6.3 MMboe/d, comprising 49% oil and 51% gas, and certain start-up/ramp-ups developments should offset declines from older producing fields.
Main projects coming onstream this year will beTotal’s Culzean and Equinor’s Mariner in UK waters, and Johan Sverdrup offshore Norway, the region’s largest start-up in over 20 years, with peak production of 660,000 b/d in 2023.
Norwegian gas production could hit record levels of around 11,500 MMcf/d, thanks in part to volumes from Equinor’s recently onstreamAasta Hansteen project in the Norwegian Sea.
Norway’s liquids production looks set to drop for a third consecutive year to 1.8 MMb/d, although this will be reversed by year-end, once Johan Sverdrup starts producing.
In the UK, output should rise by 4% helped by contributions from Mariner and Culzean,Hurricane’s Lancaster early production system west of Shetland, and four other start-ups.
However, there are also uncertainties for the market due to Brexit and the possibility of another global recession.
Partly in consideration of these factors, Wood Mackenzie does not expect the North Sea governments to introduce major fiscal or regulatory changes, such as Norway’s heavily debated reduction in uplift and longer depreciation period.
Costs are likely to creep up, in particular day rates for North Sea floating rigs. These rose by around 15% in 2018 and the analyst foresees a similar increase this year.
01/08/2019
