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Report suggests "renaissance" for North Sea Oil & Gas



Forecasts from Norwegian independent energy research and consulting firm Rystad Energy suggests that as many as 38 new UK offshore projects could receive final investment decisions (FIDs) over the next three years - bringing in up to $22.6 billion (£18.8bn) in greenfield expenditure.

Rystad Energy called the forecasts an upstream renaissance for the offshore sector
(Image via Zukiman Mohamad / Pexels)

“If operators’ plans play out as intended, the 38 potential project commitments expected over the next three years will provide fertile ground for contractors, and a quick look at successful UK North Sea service companies from the recent past sheds some light on who may capture this growth in the near future,” said Audun Martinsen, Rystad’s head of oilfield services.

The firm expects the number of UK project commitments to shrink slightly this year before rising sharply in both 2020 and 2021. It’s thought that 18 FIDs will be made in 2021, worth a combined $9.3 billion. The following year will be lower - with only 7 FIDs due - but will include high value developments projected at $8 billion in capex investments.

“The largest single development on the list is Hurricane’s Lincoln project, at an estimated £4.5bn, albeit recognizing that its schedule could be hindered depending on the viability of its fractured basement reservoir,” said Martinsen.

“The largest project likely to be sanctioned before the end of this year is the £830 million first phase of Siccar Point’s Cambo development.”

Rystad claimed that the engineering, procurement, construction and installation (EPCI) market will grow by 65% over the next three years, with revenues in the subsea and seismic markets expected to rise by 35%. It’s thought that most of the contracting work will go to major players in the supply chain - TechnipFMC, Wood and Schlumberger.

“After several tough years, the sun may finally be ready to shine again on the UK offshore market,” said Martinsen.

The positivity in the report is backed up by Wood Mackenzie, who say that exploration activity on the UK continental shelf has been revitalised.

After only 8 exploration wells were drilled last year - the lowest since 1960 - Wood Mackenzie highlight a return to levels seen in 2015-16 with 15-20 exploration well completions this year.

Glenn Morrall, an analyst with Wood Mackenzie’s upstream research team, signalled the Glengorm discovery as being a “silver lining among the clouds.” The 250m barrel discovery was made in the central North Sea in January by Chinese firm Cnooc, and revealed as the UKCS’s largest gas find since Culzean in 2008.

“We assume the field will be progressed as a multi-platform standalone development, similar to the nearby Culzean field, with gas export via the CATS pipeline and liquids export via Norpipe,” said Morrall.

There are also expectations for drilling in other prospects located in the vicinity of Glengorm, including Cringletie, Mansfield and Minard.

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Report suggests "renaissance" for North Sea Oil & Gas - Time to read 3 min
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