38 new UK offshore projects could be sanctioned by 2022, Rystad says

September 3, 2019, by Offshore Energy Today

Energy intelligence group Rystad Energy expects a new wave of UK field development projects to be sanctioned towards 2022.

In an analysis released on Tuesday, Rystad said the final investment decisions (FIDs) could be reached on as many as 38 new UK offshore projects over the next three years, representing $22.6 billion in greenfield expenditure if UK prospective resources live up to expectations.

Audun Martinsen, head of oilfield services research at Rystad Energy: “If operators’ plans play out as intended, the 38 potential project commitments expected over the next three years will provide fertile ground for contractors, and a quick look at successful UK North Sea service companies from the recent past sheds some light on who may capture this growth in the near future.”

“After several tough years, the sun may finally be ready to shine again on the UK offshore market,” Martinsen remarked on the opening day of Offshore Europe.

Rystad has reminded that the UK offshore greenfield investments were seriously hit during the downturn, decreasing from a peak of $20 billion in 2013 to a “paltry” $550 million in 2016. This then led to oilfield service unit prices in the region to fall by 27% on average.

Sharp rise in 2020. Hurricane’s Lincoln largest

“Rystad Energy expects the number of UK project commitments to shrink slightly this year before rising sharply in 2020 and again in 2021, when we forecast a new peak with about 18 FIDs worth a combined $9.3 billion. We expect to see far fewer projects sanctioned in 2022 – only around seven – but they include some major developments and the collective capex commitment should still be large, projected at $8 billion,” Rystad said.

“The largest single development on the list is Hurricane’s Lincoln project, at an estimated $5.4 billion, albeit recognizing that its schedule could be hindered depending on the viability of its fractured basement reservoir,” Martinsen said.

Hurricane Energy in 2016 discovered a significant oil column at the Lincoln prospect. The company on Monday said it was preparing for drill stem testing at its Lincoln Crestal well, located in the Greater Warwick Area offshore the UK.

Cambo largest by 2019 end

Looking at the months ahead Martinsen said: “The largest project likely to be sanctioned before the end of this year is the $1 billion first phase of Siccar Point’s Cambo development.”

The Cambo field, located 125km northwest of the Shetland Islands and in a water depth of 1100 meters, was discovered in 2002, and subsequently had four appraisal wells drilled up to 2012 and a final successful appraisal well was drilled and flow tested by Siccar Point during the summer of 2018.

Siccar last week awarded an exclusive Front-End Engineering and Design (FEED) contract to Sembcorp Marine for the design of a Sevan cylindrical FPSO for the Cambo field.