Eldon Ball, Houston
Back in 2004, when Nexen (formerly known as Canadian Occidental Petroleum) acquired EnCana’s entire UK North Sea exploration and production spread, Nexen’s President Charlie Fischer commented: “This is the most attractive suite of assets I’ve seen available for purchase in quite some time...with significant upside potential.”
As it turns out, Fischer may have been conservative in his analysis. The Buzzard field (43.2% Nexen’s), part of the purchase, is the UK’s largest new discovery of the past 10 years, and the £1.5 billion development project is the widest in scope since BP’s Clair, earlier this decade.
As part of this month’s North Sea special report,Jeremy Beckman, Editor Europe, met with Phil Oldham, Nexen Petroleum UK’s current managing director, based in London, for the full story on how Nexen went about developing Buzzard and its other North Sea acquisitions. Don’t miss his article beginning on page 38.
Elsewhere in the North Sea, the Forties complex, Britain’s largest offshore oilfield, is on the upward track after years of steady decline. The new operator, Apache North Sea Ltd., has doubled production following a comprehensive investment program over the past three years. As Beckman points out in continuing his North Sea analysis, thanks to an improved recoverable reserve outlook and modernization of the existing facilities, Apache believes it is possible to sustain operations at Forties beyond 2030. Beckman sat down withJim House, regional VP and managing director of Apache North Sea. His report on Apache’s ongoing North Sea E&P strategy starts on page 30.
To put the Apache and Nexen deals into perspective, remember that back in 2003, when Apache closed on Forties, oil started the year trading at roughly $33/bbl, then dropped below $25/bbl temporarily when OPEC increased production twice. In 2004, when Nexen made its move, oil was back to about $33/bbl and trending upward, but no one expected it to go anywhere near its current levels. That is to say, neither Nexen nor Apache did the math on $75 oil. They simply saw value still in place in the North Sea and backed up that belief with action. The current oil prices certainly make that strategy look all the better, but no one had a crystal ball back in 2003-2004. No one is sure where prices will go over the next 10 years, but for the foreseeable future, the North Sea has all the appearances of a ship that’s going to be afloat for a long time to come.
Welcome to Norway
As the official media sponsor for ONS 2006, we atOffshore want to welcome you to Norway. For those who can’t attend the Stavanger conference and exhibition in person this year, we include a special supplement on Norway in this month’s issue, beginning on page 119. Compiled by Contributing Editor Nick Terdre, the Norway supplement focuses on the extensive offshore technology developed by Norwegian companies and on the activity of Norwegian operators.
Top speakers at ONS 2006, Aug. 22-25 in Stavanger, include Claude Mandil from the International Energy Agency, Rex W. Tillerson of ExxonMobil, Helge Lund of Statoil, and Norwegian Premier Jens Stoltenberg.
Norwegian Crown Prince Haakon will open the conference. He is the third generation of Norway’s royal family to perform this ceremony at ONS since the show started in 1974. Following a speech by Stoltenberg on Norwegian oil policy, Mandil, Tillerson, and Lund will address the theme of bridging the energy gap.
We hope to see you there.
