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Much has been achieved in the past year, as we see prices and costs slowly turning around. But there is more work to be done. Using our 2016-2017 Global Upstream Cost Survey we look at the North Sea cost evolution from 2014 to 2020. Following the costs review, we highlight upcoming FIDs using our project tracker.
The oil price drop in 2014 was a major reality check for the North Sea. But by some measures at least, the industry has reacted remarkably well. Country level opex per barrel has dropped 40% in the UK and 30% in Norway. This was particularly crucial in the UK. As for new developments, only 35% of pre-FID reserves in the combined UK/Norway portfolio had NPV10 breakevens below US$60 in 2014. That figure now sits at 76% of reserves — albeit with a different set of projects. Much has been achieved in the past year, but it is clear the work doesn’t stop here.
Bigger FIDs on the horizon
Locking in lower costs will be a key driver as the appetite for FIDs in the North Sea increases in 2017. There will be a clear uptick in activity and scale with bigger projects vying for the green-light as companies put growth back on the agenda. Eyes will continue to be on Statoil’s Johan Castberg in the Barents Sea and Hurricane Energy’s Lancaster in West of Shetland. Progression of these frontier projects signals a recovery is well and truly underway. There is clearly still a lot to play for in the North Sea.
Discover key details of around 100 projects worth US$140 billion of investment and 10 billion barrels of reserves. Our North Sea Project Tracker insight report includes our estimate of project FID and start up date, reserves, peak production, capital expenditure, breakeven price and overall project value. Fill in the form on this page to see a snapshot of the report and keep an eye out for our Q2 report coming soon.
Our new Global Project Tracker (GPT) is an online pre-FID equipment and services quantification tool, which provides even more in-depth information on pre-FID projects and their associated service requirements.