Economic Report 2019

ECONOMIC REPORT 2019

Thirty-seven licences were awarded across 30 companies in the 31 st UK Offshore Licensing Round, representing a near 50 per cent increase in awards compared with the previous frontier round (the 29 th Round), and 13 more companies offered licences. It is also encouraging that 70 per cent of the awards contain commitments to obtain or reprocess seismic data which will aid future success rates. Two licences will also progress straight to the field planning stage: Shell with an award in the area around the Penguins field in the northern North Sea; and Chrysaor with a licence in the central North Sea containing the Phoenix discovery. The 32 nd Licence Round is now open for applications and the results of the 31 st Supplementary Round (focused on the Greater Buchan Area) will be announced later this year. The level of interest seen in recent rounds demonstrates the continued attractiveness of the basin to a range of different E&P companies. The support of government and regulators remains key, with recent examples of support welcomed by industry: • The National Data Repository (NDR) has been established to house the UK’s petroleum-related data and information in an accessible way, which will help companies unlock the remaining potential of the UKCS. Geophysical, well and infrastructure data are all held in one data centre, enabling licensees to share their data with each other, and providing an important vehicle for companies to apply new technological techniques which should enable more accurate interpretation of the subsurface. • The government has invested in the collection and reprocessing of new seismic data covering underexplored areas which were selected after industry engagement. The programme has helped to support the UK oil and gas industry by providing seismic data in areas which have not been surveyed for many years. The funding has also allowed other geological studies to be conducted and the findings released to industry to complement the data, increasing understanding of the petroleum systems active in the UKCS. • Industry and regulators are also working together to bring greater transparency to the licensing process in the UK. This should allow industry to better understand when awards will be made and what external factors may affect the licensing timeline. OGUK’s annual Exploration Conference also provides a unique opportunity for licensees to share recent lessons learned gained from drilling E&A wells in the North Sea and Atlantic Margin. Delegates are able to learn from each other’s experience and take away learnings to implement in their own companies when planning and executing E&A wells. OGUK proactively encourages operators to share the lessons they have learned after drilling operations are complete. Unlocking Opportunities to Increase Recovery The recovery factor of fields in production has remained unchanged over the past decade, with around 43 per cent of total reserves in place being recovered. The increasing technical and economic challenges as the basin has matured have been key issues in limiting cross-industry improvements in recovery factors, however even a small improvement can unlock significant value; the OGA estimates that a 1 per cent increase would unlock an additional 340 million boe. Better understanding of barrel-adding opportunities — including increased well intervention activity and enhanced well delivery — will all contribute towards improving overall recovery rates. The development and uptake of new technologies, constructive working across E&P companies and partnerships with the supply chain are all key to improved industry performance.

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