Stories about the demise of North Sea oil and gas exploration are aplenty. The mature prospect peaked in 1999 and admittedly its heyday has come and gone. However, every single prediction about its end of life date has been wrong.
Towards the turn of this decade, the only business uptick expected in the North Sea was a “decommissioning bonanza” in the eyes of many analysts. Instead, production rose as back-dated investment yielded incremental volumes of oil and gas.
That said, each time an international oil company decides to divest its North Sea assets, premature obituaries about the hydrocarbon prospect get dusted and queued up. So when, Chevron said back in July that it wanted to divest most of its North Sea assets, the same familiar drill kicked into gear.
Except that fresh data, yet again, suggests North Sea exploration is alive and kicking, or in the eyes of some conservative industry forecasters – not quite dead yet.
And it won’t be for sometime if industry data and projections from multiple sources are anything to go by. In its latest research, Westwood Global Energy, forecasts that 17 exploration wells could be drilled on the U.K. continental shelf (UKCS) over the next 18 months, with a yield potential of over 2 billion barrels of oil equivalent (boe).
Admittedly, that figure is just over half of the wells drilled in 2008-09, but nowhere near an end-game scenario. Of the projected volume, over 50% is located in new West of Shetlands plays, and over 600 million boe in the Central North Sea, the U.K. consultancy says.
So far in 2018, operators have taken 11 final investment decisions (FIDs), adds Wood Mackenzie, another industry consultancy. More longer term and from a dollar valuation standpoint, the market would be looking at $43.1 billion worth of new North Sea project investment between 2018 and 2025, according to GlobalData.
While Chevron, is heading to the door, the highest operating company in the North Sea – Norway’s Equinor (formerly Statoil) – has nine planned and announced projects in the said fiscal window.
Global data says of the projected $43.1 billion investment, around $18.9 billion is being spent to bring the planned projects online and $24.2 billion on key announced projects.
Expected proceeds could contribute about 1,327.4 thousand oil barrels per day (bpd) of crude and condensate production, and about 1,924.4 million cubic feet per day (mmcfd) of gas production, the consultancy adds. In terms of the number of planned oil and gas projects by country, the U.K. leads with 11, followed by Norway and the Netherlands with eight and two, respectively.
As for majors shying away from the North Sea theory – BP has announced two fresh North Sea discoveries it is investing in. Shell has announced four positive North Sea FIDs in 2018 alone, including its decision to move ahead with development of the Arran field, alongside Penguins, Alligin and Fram prospects.
Finally, Total said last month it was committed to the region following its natural gas find in the Glendronach prospect, in the West of Shetland. Whichever way you look at it, the North Sea continues to yield and defy predictions about its demise.