Annual global review finds encouraging trends

May 8, 2017
Offshore's annual global review and analysis inside this issue finds a number of encouraging trends, including one major offshore region that has maintained steady E&P activity throughout the downturn.
David Paganie Houston

Offshore’s annual global review and analysis inside this issue finds a number of encouraging trends, including one major offshore region that has maintained steady E&P activity throughout the downturn. Indeed, all regions have been impacted by the oil price decline. But during 2014-16, capex for projects across the Middle East region declined only nominally during this period and did not translate into a fall in activity, writesJeremy Beckman,Offshore Editor-Europe. Most of the NOCs, led by Saudi Aramco, have continued to increase spending year on year, apart from Iraq where the rig count has been impacted by US shale. Kuwait plans to spend $12 billion on oil and gas field activity over the next five years; Abu Dhabi will raise its production to 3.5 MMb/d in 2018, with offshore development contributing to most of that growth.

In Saudi Arabia, Aramco is laying the foundations for long-term sustainable oil production of 12.5 MMb/d, while continuing to develop its gas sector via incremental projects on very large associated and non-associated gas fields.

Meanwhile, Qatar Petroleum has ended its self-imposed moratorium on the North field, announcing plans for a new gas project in the field’s southern sector. Work should begin over the next few months.

Beckman’s full Middle East review beginshere.

In the US Gulf Mexico, a number of field development projects will move forward this year, despite the malaise that continues to hang over the Gulf, writesBruce Beaubouef,Offshore Managing Editor. Perhaps most notable is BP’s Mad Dog Phase 2 project, which was sanctioned last December. Estimated to cost some $9 billion to develop, the deepwater Gulf of Mexico project calls for a new floating production platform with the capacity to produce up to 140,000 b/d of crude oil from up to 14 production wells. Oil production is expected to begin in late 2021. The second Mad Dog platform will be moored about 6 mi (10 km) southwest of the existing Mad Dog platform, which is located in 4,500 ft (1,372 m) of water.

Elsewhere, Shell and Mitsui (MOEX North America LLC) have announced that they are moving forward with phase one of their Kaikias project in the deepwater Gulf. The companies say that Kaikias has a competitive go-forward break-even price below $40/bbl. The project will be developed in two phases. The first phase includes three wells tied back using a single flowline to the nearby Shell-operated Ursa production hub. The wells are designed to produce up to 40,000 boe/d. Phase one is expected to start production in 2019.

Beaubouef’s complete US GoM report beginshere.

In Latin America, ExxonMobil and its partners continue a string of drilling successes on Guyana’s deepwater block Stabroek, according toJessica Tippee,Offshore Assistant Editor. The latest and third oil discovery, Snoek-1, hit pay similar to the Liza-1 discovery well to the north. The discovery follows ExxonMobil’s recent Payara find and Liza-3’s uncovering of a new reservoir on the same block.

Wood Mackenzie says its base case for Liza-Payara is 1.5 Bbbl of oil, while Snoek may add a further 220-370 MMbbl. The partners have also identified five more prospects on the block that they plan to drill through 2018. The three Stabroek discoveries are within 30 km (18.6 mi) of each other, so economies of scale could be achieved if associated FPSOs and subsea infrastructure were shared.

The partners are taking a phased approach to the area’s development. Wood Mackenzie anticipates two large FPSOs to develop Liza and Payara and a further vessel for Snoek.

It has drawn up two scenarios for Snoek: a high case with reserves of 370 MMbbl produced through a 120,000-b/d FPSO, and a base case of 220 MMbbl with an 80,000 b/d-FPSO.

Tippee’s full Latin America review begins onhere.

Meanwhile, Barclays discusses three prevailing themes that are emerging from the industry’s efforts to transform offshore operations. These include a movement toward smaller projects; increasing focus on speed to market; and structurally lower offshore development costs.

Barclays’ offshore market outlook beginshere.