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Phoenix rising – UK offshore industry poised for surge of FIDs

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Oilfield Technology,

The UK offshore oil and gas industry is stirring back to life, fuelled by a robust uptick in the number of field development projects on which operators are expected to reach a final investment decision (FID) this year.

According to research from Rystad Energy, 13 UK fields are expected to be sanctioned in 2018, versus only four UK fields gaining approval during the past two years.

The latest example, and potentially the second largest of the UK fields projected to reach FID this year, is Shell’s announcement last week of FID on the Penguins redevelopment project, featuring recoverable reserves of just under 100 million boe. The development plan involves an upgraded FPSO designed to handle a peak production of 45 000 boe/d.

Another UK project that appears to have received FID – possibly even before Shell’s move on Penguins – is Decipher Energy’s Orlando field, where Diamond Offshore has been selected to drill a development well this year.

The remaining 11 forecasted FID projects in the UK this year are steered by a spectrum of operators, from minnows to majors, and will use a variety of development solutions. “Floaters, subsea tiebacks and platforms to serve projects large and small means there will be something for everyone,” commented Readul Islam, Rystad Energy research analyst.

Another operator lining up to launch an FPSO project this year is Alpha Petroleum with its Cheviot field development. The company has already chosen the FPSO that it aims to modify for the scheme: Teekay’s idle Varg floater. Being just the second UK FPSO expected to reach FID since 2016, the Cheviot project likely looms large on the radars of regional service providers.

Meanwhile, Independent Oil & Gas hopes to hand out a series of platforms to develop several gas fields, and Nexen/CNOOC continues to plot the next phase at the massive Buzzard field.

The timeline of some of these FIDs could change. BP, for instance, is expected to start up its Clair Ridge field early this year – but after kicking off such a large scheme, the company might not be in a hurry to move ahead with the extension project called Clair South, even though the latter has government consent to proceed.

Conversely, some early 2019 FID candidates could slide forward into 2018 with some hard work and a little luck. Siccar Point Energy pulling the trigger a few months earlier than expected would mean another FPSO project in 2018 for its Cambo early production scheme.

The 13 UK FIDs forecasted for 2018 contain two projects tracked in Rystad Energy’s FID delays tracker: Buzzard Phase 2 and Orlando (which will be removed from the tracker after sanctioning). “This encouraging sign means the industry largely seems able to progress developments within the expected timeframe,” commented Islam.

It remains to be seen exactly how many UK projects end up securing FIDs this year, but there is no denying the positive trajectory for the sector. Whereas the four UK projects that received FIDs in 2016 and 2017 represented some 123 million boe of reserves (including the cross-border Utgard field, with the majority of the reserves on the Norwegian side), the 13 FIDs projected by Rystad Energy in 2018 represent about 550 million boe.

“The trend is unambiguous,” Islam noted. “The UK industry has reason to smile after a couple gloomy years.”

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