Intelligence brief: UKCS returns at all-time low; Norway urged to follow US, UK on unmanned platforms
Upstream oil and gas news you need to know
UKCS net rate of returns fall to all-time low
The net rate of return for companies operating on the UK Continental Shelf (UKCS) slumped to 0.6% in the final quarter of 2015, the lowest since the Office for National Statistics (ONS) began keeping records in 1997.
Returns for UKCS companies – which are mainly involved in the extraction of oil and gas from the North Sea – came in at 8.8% in the final quarter of 2014 and at 1.9% in the third quarter of 2015. The peak was at 65.5% in the final quarter of 2007 when the Brent crude benchmark averaged $89 per barrel.
Noting that the Brent crude price fell from $77.06/barrel in the fourth quarter of 2014 to $44.77/barrel in the fourth quarter of 2015, the ONS said the lower prices had affected other industries linked to oil extraction.
Half of FTSE companies involved with oil equipment, services and distribution issued profit warnings in 2015, it said, citing an EY report. This coincided with a 2.3% decline in the output of companies involved in the extraction of crude petroleum and natural gas between the third and fourth quarters in 2015, the ONS said.
The overall rate of returns in the UK North Sea has fallen dramatically in the past decade (Source: ONS)
Norway urged to follow US, UK on unmanned platforms
Unmanned wellhead platforms can help operators in the more-shallow part of the Norwegian Continental Shelf to reduce costs and improve efficiency, Ramboll has recommended in a report that compared the Norwegian North Sea with other regions.
The report, which was filed to the Norwegian Petroleum Directorate, compared five types of unmanned wellhead platforms (UWHPs). It concluded that a minimalistic platform, with no processing facilities and designed to operated unmanned for up to two years, is the preferred concept. For more complex reservoirs with frequent well-intervention operations, it recommended using either: a complex platform with helideck and fire water (fire-fighting) system and various process equipment, allowing for remote operation for up to five weeks; or a simple platform with helideck but no fire water system, designed to operate unmanned for two to three weeks at a time.
Ramboll said new regulations were needed to support the uptake of unmanned platforms in Norwegian waters. Only five of the 99 platforms installed in Norwegian waters are unmanned, at a range of 70-125m water depth. In the UK, 148 of the 590 platforms are unmanned, reaching to as deep as 150m. In Danish and Dutch waters, a combined 61 of 210 platforms are unmanned, although these reach only as deep as 70m. And in the US portion of the Gulf of Mexico, there are more than 1,000 unmanned platforms at depths of 20-180m, out of a total of more than 4,000 platforms, the report noted.
The report listed four main reasons for the low number of UWHPs in Norwegian waters: the size of the fields, distance to infrastructure, water depth and the regulatory requirements. In the UK North Sea, operators have used unmanned platforms since the mid-1980s. In the US, most of the UWHPs are very simple structures, often holding only one well per platform, it said.
Different types of unmanned wellhead platforms can be applied to different projects (Image credit: Ramboll / Norwegian Petroleum Directorate)
Topsides en route to Culzean, Montrose projects in North Sea
There are signs of life in the UK North Sea, with Maersk Oil announcing that fabrication of the billion-dollar topsides for its Culzean project has begun, and Talisman Sinopec Energy UK promising the imminent arrival of bridge-linked platform (BLP) topsides at the Montrose Area redevelopment.
The steel-cutting ceremony for the first of the three topsides modules to be delivered to Maersk’s $4.5 billion Culzean project was held at the Sembcorp Marine Offshore Platforms (SMOP) Admiralty yard in Singapore in the first week of April. The contract with SMOP was awarded in September 2015 and is worth more than $1 billion. It includes the building of the central processing facility plus two connecting bridges, wellhead platform and utilities and living-quarters platform topsides for the Culzean field development.
Culzean is being developed as a “21st-century facility” with the ability to remotely monitor critical equipment 24 hours a day, to enable offshore personnel to access real-time data and immediate technical evaluation and onshore support, according to project director Martin Urquhart.
The Montrose BLP has sailed out from the Heerema Fabrication Group’s Zwijndrecht yard 12 miles south of Rotterdam in the Netherlands. It was scheduled to detour to another port five miles west of Rotterdam for the installation and commissioning of an 80-ton pedestal crane and the attachment of the upper sections of the exhaust stacks. At the end of April the platform will travel 430 nautical miles to the Montrose area in the central North Sea, Talisman said.