Despite the low price environment, the North Sea is booming: a total of 30 crude and natural gas projects are scheduled to start production there by 2020.
The U.K. will lead with 20 projects, Norway will follow with nine and Denmark will round out the number with a single project, according to GlobalData, a U.K. research and consulting firm.
The downturn has actually been good for the North Sea, says GlobalData. Operating costs have nearly halved from approximately US$30/bbl to just over US$15/bbl, and projects being sanctioned now cost less than those sanctioned in 2013. The planned projects are expected to require a total capex of US$71.1 billion.
Norway plans to spend the most, approximately US$19.3 billion between now and 2020, US$13 billion of which will be spent on the Johan Sverdrup oilfield about 140 kilometres west of Stavanger, Norway. At the company level, Statoil tops the spending charts with a total of US$10.4 billion.
Another key factor to the North Sea experiencing an upswing is that production forecasts have climbed from what they were in 2016, and they are expected to continue to rise as new fields are brought on stream.
The total recoverable reserves for the 30 projects starting up in the near future is 5.2 billion boe. Statoil holds the most reserves at 1.6 billion boe, Lundin Petroleum follows with 635.9 million boe, Petoro with 610 million boe, Maersk with 414 million boe and Aker BP with 381.2 million boe.
“Of the 30 upcoming North Sea projects, 21 are crude oil projects and nine are gas projects,” says Luis Pereira, an upstream analyst at GlobalData.
“Norway will dominate oil production, while the U.K. will dominate gas production. The key planned projects in the North Sea are expected to contribute around 690 thousand bbls/d of oil to global crude production and about 1,255 mmcf/d to global gas production in 2020.”
Pereira says 10 more fields are lined up to start production in the North Sea between 2021 and 2023, representing US$21.2 billion of further capex investment and 1.1 billion boe more recoverable reserves.