North Sea Oil Has Escaped Its Death Spiral
The oil industry is expected to increase spending in the North Sea and the number of projects that could receive a greenlight is set to rise this year for the first time in half a decade.
An estimated 12 to 16 green-and brown-field projects are expected to be sanctioned in 2018, according to a report from Oil & Gas UK. To put that in context, only 17 projects moved forward between 2014 and 2017, combined.
That would translate into additional spending of about 5 billion pounds and the production of 450 million barrels of oil equivalent over time. As a result, revenues for oilfield service and supply chain companies will rise for the first time in years, the report predicts.
More spending and drilling will ultimately mean more oil and gas production from the UK North Sea over the next two years, although the level of spending and drilling “still falls short of the level required to sustain long-term production at current levels,” Oil & Gas UK said.
“While the project landscape for 2018 is the healthiest the industry has seen since 2013,” the industry will still need “greater exploration success” and will also need to boost production in existing assets in order to avoid decline. For its part, Standard Chartered says that without more gains in spending and the sanctioning of new projects, output will once again head into decline after 2019.
The lack of investment from the last few years will soon start to bite. “Between 2014 and 2017, 33 new fields came on stream. This year, just four to six new field start-ups are expected,” Standard Chartered wrote in a note. “Drilling remains an ongoing concern; exploration, appraisal and development continue to falter.”
The bank says that only 94 wells were drilled in 2017, the lowest figure since 1973.
…click on the above link to read the rest of the article…
