The latter part of last year saw several major operators snatch the headlines, making crucial final investment decisions (FIDs) on major North Sea projects.
Statoil, after its wobble over the 2011 surprise tax increases in the UK, is to invest USD 4.5 billion in its heavy oil Mariner project, with an FID also expected to follow late this year for the Bressay development. KNOC subsidary Dana Petroleum also received DECC approval late last year for its USD 2.6 billion Western Isles project, while Shell received consent earlier in 2012 for its Fram development. Talisman, meanwhile, also won approval for its MonArb Area Redevelopment Project.
Behind the billion-dollar headlines, however, the industry is showing signs of steady recovery from the 2011 global financial crisis, buoyed by several measures by the UK Government, including the Small Field Allowance (SFA), the Brown Field Allowance and the Shallow Gas Field Allowance.
Data from IHS Petrodata’s FieldsBase shows that a total of 34 projects – of which over 50 per cent were subsea tiebacks – came onstream in 2012. This year will see an increase in construction activity, with IHS Petrodata expecting 43 new projects to come onstream in the region. Almost 60 per cent of these projects are subsea tieback developments, but it is also significant to note that over 10 new fixed developments are also expected to be completed by the end of 2013.
Look beyond the headlines, however, and it is clear that it is not only the major operators showing a renewed confidence in the North Sea. In particular, the UK’s Small Field Allowance has allowed smaller operators such as Premier and EnQuest to make significant steps forward. Premier’s Catcher and Solan projects are both expected to benefit from the allowance, as well as EnQuest’s Kraken project. Antrim Energy, meanwhile, has made bullish progress on the marginal Fyne FPSO development, with an ambitious production startup target of quarter one, 2014.
This year could also see renewed focus on the underdeveloped West of Shetland area – bypassed by many operators due to a lack of existing infrastructure, shorter weather windows, difficult subsea conditions and the cost and scarcity of harsh and deepwater rigs. Chevron is spearheading development efforts in this area, with its planned Rosebank FPSO development now in the FEED stage, though first production on this challenging project is not expected until 2017/18.
In Norway, meanwhile, another difficult region could be opened up for new development with Statoil’s submission of development plans for the USD 5.9 billion Aasta Hansteen field and the USD 4.5 billion Polarled pipeline project. Already this year, therefore, the industry is demonstrating confidence in moving ahead with both the challenging, game-changing projects in harsh waters – and those marginal developments which required some kinder economic conditions.
Catherine MacFarlane is a field development analyst for Europe and Africa at ODS-Petrodata