Economic Report 2018

ECONOMIC REPORT 2018

Reserves Progression – Improving Recovery From Existing Fields Improving recovery from already producing assets provides a lower-risk, lower-cost route to reserves replacement and vital production throughput for legacy infrastructure.

The UKCS’ recovery factor is currently around 43 per cent; if this does not improve then, on average, less than half of the reserves in fields which have been developed would be expected to be produced. 31

The cost of recovery goes up as recovery factors increase, however there is an estimated 2.1 billion boe in near field opportunities and, if these are to be realised within the life of existing infrastructure then an integrated approach will be needed to balance improving recovery with efforts to improve production efficiency. In recent years, significant capital has been invested to improve the integrity of ageing assets, thus protecting vital infrastructure for future opportunities and improving production efficiency. The subsequent improvement in reliability has led to increased output and must be maintained. There is significant industry focus on improving the progression of contingent resources in existing fields, given that even a small increase in recovery factor will result in a significant increase to produced volumes. An additional 1 per cent increase in the recovery factor of fields which are currently in production would result in an increase of 340 million boe of total volumes expected to be produced. • Improve investment in data and technology to help to drive increased recovery. The work by Apache to increase the reserve base in the Beryl area is a good example of this (see case study in section 5.4). • Increased investment in development drilling delivered through lower, sustainable, credible well costs and improved drilling efficiency, ensuring that wells drilled are high quality and produce maximum value. • Increase production optimisation activity through: - Overcoming barriers to investment - Ensuring that the benefits and value of this activity are visible and recognised - Unlocking high-value opportunities, by reducing the risk profile of these opportunities through improved industry knowledge-sharing and by driving cost savings - Increasing the level of well intervention activity to restore production from shut-in wells and safeguard production from producing wells In conjunction with the Asset Stewardship Task Force, Oil & Gas UK’s Reservoir & Wells Optimisation Task Group aims to increase the hopper of barrel-adding opportunities in existing fields, in order to drive an improvement in overall recovery rates. The group is focused on three key areas, aligned with the priorities outlined above: • Overcoming barriers to investment – It is critical that companies are aware of barrel-adding opportunities and that the value of these investment opportunities is well understood. The group is facilitating the sharing of good practice across companies with regards to processes for creating and progressing a hopper of production optimisation and well work opportunities. • Unlocking fracking and stimulation opportunities – By sharing good practice and lessons learned, the group are aiming to increase understanding and reduce risk around these jobs. • Well intervention performance benchmarking – Benchmarking companies on well-intervention metrics (such as cost per boe, contribution to production and success rates) helps to drive performance improvements and unlock new investment by creating visibility of, and confidence in, the value of well interventions. In order to improve the recovery factor, it will be important to:

31 www.ogauthority.co.uk/media/4155/recovery-factor-report-7-september.pdf

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