UK Offshore Poised for Comeback

UK Offshore Poised for Comeback
The UK offshore scene is poised for a timely comeback, according to Rystad Energy.

The UK offshore scene is poised for a timely comeback.

That’s according to independent energy research and business intelligence company Rystad Energy, which made the statement in a post on its website on Tuesday.

In the post, Rystad revealed that it expects a new wave of UK field development projects to be sanctioned towards 2022. The company forecasts that final investment decisions (FIDs) could be reached on 38 new UK offshore projects over the next three years, “representing $22.6 billion in greenfield expenditure if UK prospective resources live up to expectations”.

Rystad noted that it expects the EPCI (engineering, procurement, construction and installation) market to grow by 65 percent over the next three years. The subsea and seismic markets are each forecasted to expand by 35 percent, according to Rystad, which expects maintenance and operations, well services and commodities, and drilling contractor purchases to grow “at a more subdued rate”.

In the post, Rystad highlighted that UK offshore greenfield investments were “severely hit” during the downturn, declining from a peak of $20 billion in 2013 to $550 million in 2016.

Exploration Activity Is Back

In a statement sent to Rigzone on Tuesday, Glenn Morrall, an analyst with Wood Mackenzie’s upstream research team, said “UK exploration activity is back”.

“Having languished in 2018 to its lowest level since the 1960s, companies have stepped back into the breach this year,” Morall added. “We expect there to be between 15 and 20 completed exploration wells, similar to the numbers drilled in 2015 and 2016”.

In the statement, Morall highlighted that CNOOC’s Glengorm discovery was the UK’s largest in 10 years, excluding fractured basement discoveries.

Looking at the North Sea as a whole, Wood Mackenzie forecasts that 2019 will see over 60 exploration wells, which would be a 25 percent increase compared to 2018.

“What’s changed? Budgets are higher and company portfolios are brimming with prospects matured through the downturn,” Morall stated. “The competition for assets in the mergers and acquisitions market will continue to be fierce, particularly in Norway. So, growth via the drill bit is arguably a more attractive option”.

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