According to a Douglas-Westwood report, Western Europe will continue to rely on imported Russian gas into the 2020s as mature offshore provinces struggle for growth, while large-scale shale gas extraction looks increasingly unlikely in the medium term. Following Moscow’s intervention in Ukraine and the resulting strained diplomatic ties with the West, it is unclear if North Sea production can support any drop in gas flow from Russia.
With many IOCs planning investment into UK offshore fields through enhanced oil recovery (EOR), deeper water plays and downstream infrastructure upgrades, Douglas-Westwood’s Development Drilling & Production Forecast predicts that production will rally slightly to 1.75 MMbpd by 2017, requiring a maintaining of the recent 6% jump in well completions. The necessary high levels of expenditure are unlikely to be sustained in the long term due to the UK’s offshore maturity; therefore, DW expects a resumption of decline towards the end of the decade.
The report says hope for any long-term growth rests with reform of the UK’s offshore regulator, which must swiftly adapt to the shift toward production from smaller fields.
On the other side of the North Sea, Statoil is attempting to improve recovery from brownfield projects offshore Norway. Along with the start of projects in the large Johan Sverdrup and Goliat fields, this will see the number of well completions sustained at about 200 a year beyond 2020.
The study predicts these projects will see Norway break from the mold of other mature Western European producers and sustain production into the next decade. It must be noted that both of these fields are subject to delay. Johan Sverdrup is facing electrification issues while ENI’s Goliat FPSO is still to be completed and may take millions of man-hours more.
Potential risks to future growth include rising costs and the potential (albeit small, and in the longer term) competition from shale gas production. A recent victim of rising costs was the subsea compression project at Ormen Lange, despite positive results during testing and the backing of Statoil and ExxonMobil.
Recent onshore legislation changes in the UK now allow for drilling and pipeline construction under private property. This, along with growing encouragement from Westminster of E&P companies, indicates that shale gas extraction could be possible on a larger scale toward the end of the decade.