ONS 2016: Execs spell out plans to sustain E&P work offshore the UK, Norway and Egypt

By Kurt Abraham, Editor on 8/30/2016

As the global upstream industry continues to adjust to the new reality of lower oil prices, executives in key countries are looking at how to proceed with further offshore development, both efficiently and expeditiously. Leading the charge in the UK is Andy Samuel, chief executive of the relatively new Oil & Gas Authority UK (OGA). The OGA was created on April 1, 2015, and it will become an independent government company on Oct. 1, 2016.

The OGA was born out of the recommendations issued by a study group led during 2013-2014 by Sir Iain Wood, former chairman of Scotland-based Wood Group. Back in June 2013, then-Secretary of State for Energy and Climate Change Edward Davey, MP, had announced a review of UK offshore oil and gas recovery and its regulation, to be conducted by the group headed by Sir Iain Wood. The group eventually issued proposals for “greatly enhanced stewardship” by the government during the next phase of the UKCS, to “maximize oil and gas recovery.”

Since taking the reins of OGA, Samuel has instituted a number of reforms to put the offshore sector on better footing.

"The UK now has one of the more competitive regulatory regimes, and I don’t expect that to change,” said Samuel. “We listened to industry, and we heard from them, that the licensing regime was confusing. So, we’ve been working to improve that. We also license the onshore, and we’ve had good reaction to the 14th Licensing Round, especially as relates to shale.” In the medium term, added Samuel, “improving the seismic data available for the UK is a good thing, and that has to be done.”

One of the things at the heart of the Wood Review was a recommendation for more “collaboration” between operators and service companies. “We need to be more like the Norwegian model,” said Samuel. “One area where we’ve seen good collaboration is on technology. We’ve identified five key items in that regard, including asset integrity, well cost reduction small pools, digital and data, and decommissioning.”

At the end of the day, said Samuel, “our future, which we want to start with industry, has to begin with more drilling.”

Meanwhile, across the North Sea, Statoil COO Anders Opedal said that his firm is responding aggressively to market changes. “Global capex is down at least 25% since June 2014,” said Opedal. “Sure, we expect the oil price to recover, but we do not know when or how. So, as leaders in this industry, I think we (Statoil) can do more, and do it more quickly.”

The Statoil COO said that to accomplish this goal, more out-of-the-box thinking is needed.

“Also, for offshore projects, we need to speed up the pace of standardization,” added Samuel. “Fortunately, Statoil started with sustainable improvements early, before most other operators. I do think that digitalization is going to be key to improving safety, cost and efficiency.”

Farther south, in Egypt, Eni is looking to implement the next chapter in its rich, 60-plus-year history of operating in that country. “We now have 59 fields that we are involved in, of which we operate 51,” said Luca Bertelli, chief exploration officer for Eni. “And in 2015, our production accounted for 200,000 boed of Egypt’s output.”

The Egyptian government, noted Bertelli, has been actively encouraging new exploration throughout the country. “Accordingly, we have struck two very significant discoveries. And, I would say that these discoveries have a very important role in the energy security of Egypt.”

The finds that Bertelli referred to are the Zohr 1 and Nidoco gas discoveries offshore Egypt’s northern coast, both of which are being treated, in the words of Bertelli, as “ultra-fast-track developments.” The Nidoco field in the Nile Delta was made through the Nidoco NW2 discovery in July 2015, and just two months later, the well was onstream. Eni has since drilled an appraisal, and continues to conduct exploration in parallel with implementation of the field development.

As regards Zohr 1, the find is touted by Eni as being the largest gas find in the Mediterranean Sea. The find was struck in 4,757 ft of water in Egypt’s deepwater jurisdiction and is believed to hold 30 Tcf of gas in-place. Eni has said that it could satisfy all of Egypt’s natural gas needs for decades to come. “The Zohr 1 is in the Shorouk Block, which was only awarded to us in January 2014,” explained Bertelli. “We acquired 3,000 km2 of 3D seismic between January and June 2015, and Zohr 1 was drilled three years ahead of schedule.”

Since the discovery, Eni was granted approval for the Zohr Development Lease by the Egyptian Natural Gas Holding Company last February. The field is expected to go onstream in 2017. Assuming that this schedule is met, it should reach full production capacity in 2019. Overall investment in the project is estimated to be roughly $12 billion. Initial spending to bring the field into production is believed to be about $4 billion.

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