Insight
Oil price crash: can the North Sea survive at US$30/bbl?
Report summary
The North Sea has weathered several storms in its 50-year existence. But the past fortnight has thrown it into uncharted waters. The coronavirus pandemic and collapse in OPEC+ production restraint, has seen Brent reach its lowest point since 2003. In the short-term, the North Sea can survive. Cost reductions achieved during the last downturn mean 95% of onstream production is ‘in the money’ at US$30/bbl. But close to a quarter of fields will run at a loss in this price environment. The major concern here is not volumes. Early shut-ins would accelerate US$20 billion in decommissioning spend. What levers can the industry pull to ensure a sustainable future? The quickest win is to reduce opex. But longer term, investment is required increase production and reduce unit costs. If the industry goes into harvest mode, a premature end is inevitable.
Table of contents
- Executive summary
-
Most North Sea production is 'in the money' in 2020
- What levers can the industry pull to ensure a sustainable future?
-
We expect big cuts to our investment forecast– FIDs will be scarce
- The North Sea will follow the global FID trend
- What opportunities could become viable again?
- Can the service sector offer further reductions?
- Financial strength is just as important as project economics
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Could M&A provide the get out of jail card?
- Will private equity come to the rescue again?
- Is Norway's more aggressive capex outlook under threat?
- North Sea exploration to be cut by at least 20%
- Governments are unlikely to provide fiscal easing
- What does the future hold for the North Sea?
Tables and charts
This report includes 8 images and tables including:
- North Sea investment by project status
- UK capex split by peer group (2020 - 2025)
- Norway capex split by peer group (2020 - 2025)
- Number of exploration wells
- Marginal tax rate v Brent price
- SRMC by field versus cumulative oil and gas production (2020)
- North Sea pre-FID economically viable projects breakeven v cumulative resources
- North Sea deal spend v private equity %
What's included
This report contains:
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