Despite the low cycle that the market is facing, a total of 30 oil and gas projects are expected to start operations in the North Sea by 2020.
The UK will lead with 19 projects, followed by Norway with 10 and Denmark with a single project, according to research and consulting firm GlobalData.
The company’s latest report states that the North Sea has seen improvements during the downturn cycle witnessed over the past 3-4 years. Projects being sanctioned now have costs around half of those sanctioned in 2013, showing the companies have made clear improvements in cost efficiency.
Operating costs have also halved from nearly US$30/bbl to just over $15/bbl, while the production forecast has seen an increase from 2016 - a trend that is set to continue as new fields are brought on stream, says GlobalData.
The total recoverable reserves for the 30 projects expected to start in the North Sea stand at 5.2 billion boe. Statoil holds the most reserves (1.6 billion boe), followed by Lundin Petroleum (635.9 MMboe), Petoro (610 MMboe), Maersk (414 MMboe) and Aker BP (381.2 MMboe).
Luis Pereira, Upstream Analyst for GlobalData, explains: “Of the 30 upcoming North Sea projects, 22 are crude oil projects and eight are gas projects. Norway will dominate oil production, while the UK will dominate gas production. The key planned projects in the North Sea are expected to contribute around 690,000 b/d to global crude production and about 1.25 Tcf/d to global gas production in 2020.”
The planned projects in the North Sea are expected to require a total capital expenditure (capex) of $56.7 billion, of which over half (54%) is expected to be spent between 2017 and 2020.
Norway will lead in terms of capex, spending about $19.3 billion during the forecast period, of which nearly $12.9 billion will be spent on Johan Sverdrup. At the company level Statoil will have the highest capex spending, and is expected to spend a total of $19.1 billion on key planned projects through 2020.
According to Pereira, 10 more fields are lined up to start production in the North Sea between 2021-23. This will represent a further capex investment of $7.5 billion in the region, and will add 1 billion boe to the recoverable reserves.