Norway Leading the Oilfield Service Comeback
In 2015 and 2016 we saw record low levels of offshore volumes sanctioned, which effectively is hurting oilfield service companies’ backlog. With the cost cuts exploration and production players made during the downturn, coupled with the recent increase in oil prices, we now see a lot of offshore projects on a global level have become economically viable. This is leading to an increase in the number of projects in the pipeline for sanctioning, with Norway leading the comeback.
Within the segment for drilling contractors, Norway has emerged as the world’s strongest market for floating rigs, with rising demand and comparatively high dayrates. North Atlantic Drilling Limited’s semisub West Hercules, for instance, was chartered by Statoil recently for a pair of wells in the Barents Sea at a reported rate of $250,000 per day. This contract value is on par with the average floater dayrates we saw in the Norwegian market in 2017.
As the rig market in Norway now seems to be tightening on its way to recovery, there is also good news for service companies exposed to other services than drilling. Recent projects submitted to the Norwegian Ministry of Petroleum (NPD) show a clear turnaround in the offshore industry and make Norway the largest contributor to offshore project commitments in 2017. Several field development plans were submitted last year with a total value of more than $18 billion in greenfield capex. This made Norway the largest contributor to offshore developments last year followed by the US and Mozambique.
Last December, Statoil alone handed in the plans for approval of the Johan Castberg and Snorre expansion project with a total greenfield capex value of $8.5 billion. These two projects make up almost half of the project value sanctioned through a large number of projects on the Norwegian Continental Shelf (NCS) last year.
Norwegian enigeering, procurement, and construction players and global subsea providers are the clear winners from this new activity. In terms of contract awards from 2017 sanctioning activity, this represents $5.7 billion for engineering, procurement, construction, and installation (EPCI), $4.4 billion for subsea, $1.9 billion for drilling rigs, $1.4 billion for well services, $2.0 billion for other services.
The service companies that have reaped the most benefits of the increasing activity on the NCS have been TechnipFMC, Transocean, and Subsea 7. VNG awarded TechnipFMC an integrated subsea EPCI contract. This contract also covers the delivery of subsea systems to the Fenja field (previously Pil og Bue), and according to TechnipFMC, is the largest integrated EPCI award to date.
Transocean was awarded a contract with Statoil to drill 30 wells for the Johan Castberg and 24 wells for the Snorre expansion development, both of which are contingent on approval of the Plan for Development and Operation. In addition a contract was also signed with DEA for a years’ worth of work on the Dvalin field.
Subsea 7 was awarded contracts by AkerBP, their alliance partner in the North Sea. All of this suggesting that relationships with operators, contract structure, and regional exposure are key elements when handing out further contracts to the service industry in Norway as well as globally.
Republished with permission from Rystad Energy.
Subsea Markets Face High Stakes if Oil Prices Slide
In a $60 to $70 oil environment, the subsea market is poised to grow around 7% annually up to 2025. But a significant portion of this activity is at risk if the price of Brent crude falls to $50 per barrel.
Swire Seabed Completes Autonomous Pipeline Inspection for Equinor
The subsea operations company said its most recent campaign is the first fully unmanned offshore pipeline inspection completed “over the horizon,” surveying up to 100 km from the shore.
Equinor Starts Up Mariner Field in North Sea
One of the largest industrial projects in the UK in recent years, Mariner marks Equinor’s first operated field on the UK Continental Shelf. It is expected to produce 70,000 BOPD at peak rates.
Don't miss out on the latest technology delivered to your email every two weeks. Sign up for the OGF newsletter. If you are not logged in, you will receive a confirmation email that you will need to click on to confirm you want to receive the newsletter.
16 August 2019
12 August 2019
14 August 2019
14 August 2019