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Pre-FID projects at risk - can new conventional fields compete with the next wave of tight oil?

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13 June 2017

Pre-FID projects at risk - can new conventional fields compete with the next wave of tight oil?

Report summary

The future of yet-to-be-sanctioned greenfield conventional projects is in serious doubt after a tumultuous few years for oil company finances. Stretched balance sheets, marginal project economics and competition for scarce capital from US tight oil mean that many potential developments are at risk of further delay or cancellation. The uncertain outlook for higher cost developments threatens global oil and gas supply and corporate growth next decade. We look at the scale, geographic distribution and economics of greenfield conventional projects.

Table of contents

  • Summary
  • New conventional projects in crisis
    • Low breakeven pre-FID oil projects concentrated in deepwater Brazil; tail in Europe
    • Marginal oil developments weighted towards remote or technically challenging oil
  • Gas is now the bigger conventional development opportunity
    • 1. Scope for further cost reductions
      • But bringing down initial costs is only part of the story
    • 2. Corporate retrenchment to the US creates opportunities for new conventional players
    • 3. Governments could incentivise new project investment
  • Five pre-FID projects to watch

Tables and charts

This report includes 16 images and tables including:

  • Pre-FID projects at risk - can new conventional fields compete with the next wave of tight oil?: Image 1
  • Global upstream investment outlook
  • Company peer group production outlook
  • Breakeven curve of pre-FID conventional liquids projects versus US tight oil @15% discount rate
  • Pre-FID gas resource volumes by country and project breakeven
  • Pre-FID gas production outlook by project breakeven
  • Pre-FID projects at risk - can new conventional fields compete with the next wave of tight oil?: Image 11
  • Pre-FID projects at risk - can new conventional fields compete with the next wave of tight oil?: Image 16
  • Pre-FID project liquids resource volumes by country and project NPV,15 breakeven
  • Pre-FID oil production outlook by project NPV,15 breakeven
  • Resource distribution of conventional pre-FID oil projects with IRR>15% at US$60/bbl long-term Brent
  • Breakeven curve (15% IRR, Brent equivalent) for pre-FID oil conventional projects
  • Reduction in capex/boe from late 2014 pre-FID fields to 2017
  • Cost deflation scenarios for selected pre-FID fields
  • Government take NPV,10 from pre-FID projects by country (Top 10)
  • Government take NPV,10 by project breakeven (15% IRR)

What's included

This report contains:

  • Document

    Pre-FID projects at risk - can new conventional fields compete with the next wave of tight oil?

    PDF 1.18 MB

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