The oil industry at the Norwegian Continental Shelf (NCS) is expected to see a decrease in oil spending in 2016-2020 of approximately US$50 billion (£38.16 billion) on increased figures for deferred or scrapped projects.
According to Wood Mackenzie’s latest research, more than ten oil and gas projects are expected to be deferred or scrapped to cut costs in the region.
“Companies are seeking lower cost solutions, be that from cheaper market rates or different development options”, Wood Mackenzie principal analyst for Upstream Oil and Gas, Malcolm Dickson, said.
Oil Industry Slashes Spending Across Norway
The research states there are three billion barrels worth of projects waiting to be approved in the NCS.
According to Dickson, the timing for the FID is crucial to determine costs and the best time for the FID is before 2018.
After that, demand is expected to pick up, pushing costs along. “There could be a demand crunch at that point”, he said.
Dickson added that cost optimisation is crucial, as most projects only become viable with oil at over $50 per barrel.
For projects to be successful, he says, costs need to adapt to the oil price drop, with measures like lower cost drilling techniques, different vessel specifications and the use of subsea platforms.
Statoil Takes the Lead in Optimisation
Wells are now being drilled 50% faster than in 2013, Wood Mac adds, which comes to show the importance of simplification and optimisation.
Statoil is among the companies benefitting the most from the use of these techniques to cut time and costs, as is the case of Åsgard’s subsea compression, which has added 300 million barrels of oil equivalent (boe) to the project.
The Norwegian company is also at the forefront of exploration in the NCS, after having announced a major campaign in the Barents Sea starting next year.
This follows an attempt to main production levels up high at the NCS, especially in the north of Norway.
“For 2017, we see promising prospects in different parts of the Barents Sea,” said Statoil’s head of exploration Jez Averty.