New European upstream project start-ups set to increase from 2018 lows
The recovery of oil prices at the start of the new year has led to a boost in companies’ profits, and a new sense of optimism in the oil and gas industry. This will lead to a rebound in new European greenfield project start-ups from a 40-year low in 2018, according to data and analytics company GlobalData.
The company’s latest research indicates that there are 20 European greenfield projects coming online during 2019, as companies leverage infrastructure to commercialise small fields in the region. These projects are predominantly shallow-water developments in the UK and Norway.
In the UK, junior exploration and production (E&P) companies such as Hurricane Energy and Decipher Energy are targeting first oil from their respective Lancaster and Orlando projects, leveraging off advancements in technology and regional expertise to deliver value. UK projects are also benefiting from cross-company and government collaborations helping to improve project commerciality; exploration strategies focusing on near-field acreage; and asset-led campaigns which allow smaller discoveries to be monetised with little upfront capital.
The most significant project in Norway will be the new 2–3bn boe Johan Sverdrup oil field, which is set to produce first oil in 3Q2019. The new field is forecast to account for 15% of Norway’s production at peak rate.
Daniel Rogers, Upstream Oil & Gas Analyst at GlobalData, comments: ‘60% of European developments coming onstream in 2019 are fields that contain less than 50mn boe of recoverable reserves. Over the next few years, Europe is set to see an uptick in projects coming online, but with conservative growth as companies become leaner and more selective. The absence of deep- and ultra-deepwater projects is notable, stemming from a lack of project sanctioning and capital commitment during the period of deflated oil prices.’
Figure 1: Number of new projects online in Europe against Brent crude oil price, by year
Source: GlobalData Oil & Gas Intelligence Center