The North Sea has endured a turbulent few years with the fall in oil prices, brutal job cuts and the battle for an ever-declining pot of E&P investment capital.
As many assets across the region reach maturity, decommissioning remains core to every conversation about “what next for the North Sea,” though rising costs and the potential burden on the UK taxpayer could spur a different approach to the problem.
In terms of producing projects, enhanced oil recovery (EOR) technologies and improved efficiency hold the key to extending the life of older fields.
This is one area where the downturn has not all been bad news, with rising efficiency in the North Sea helping to ensure that at least some offshore development remains competitive with US shale for upstream investment dollars. The downturn has seen many operators streamline their operations, which has helped attract a raft of new project proposals that should continue to drive up production, provided prices do not fall back.
On the UK Continental Shelf (UKCS), production efficiency has risen by 57% (or 157 million boe per year) in the four years up to and including 2016, and now stands at 73%, according to the UK’s Oil and Gas Authority (OGA).
Efficiency improvements have helped generate a total of 30 new North Sea crude and gas projects that are due to start by 2020, targeting reserves of 5.2 billion boe.
Developing these projects will rely on greater technology adoption. This is critical for operators as they look to keep their costs down and maintain output well into the region’s sunset years as a hydrocarbons play and the dawning of its new era as a renewables powerhouse.
That era is already well underway. The North Sea is already home to around 10 GW of offshore wind, with recent forecasts suggesting this could top 30 GW by 2023.
Bigger turbines, greater scale and the expectation of a number of regional tenders are also allowing developers to push costs down even further; in Germany’s most recent offshore wind auction, both Dong Energy and EnBW submitted winning bids to build projects, which would generate power without the need for subsidies. Although subject to final investment decisions, these would come online in the mid-2020s.
The North Sea will also continue to serve as a vital test bed for new marine technologies which can aid both the renewables and hydrocarbons sectors. Projects such as Statoil’s Hywind (the world’s first floating offshore wind farm), the testing of new wave and tidal equipment at the European Marine Energy Centre (EMEC), and the application of new remote robotics and maintenance technologies can all contribute to a productive future for the region.
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