North Sea oil and gas producers have pulled out of the “death spiral” that had threatened to send the basin into precipitous decline according to industry leaders.
However, exploration remains at its lowest level since the 1970s and the UK faces a battle to compete against lower cost oil and gas elsewhere in the world.
The chief executives of Royal Dutch shell and BP, the UK’s largest oil groups and pioneers of the North Sea industry, both said they were optimistic about the region after deep cost cuts since crude prices crashed in 2014.
Addressing an industry conference in Aberdeen, Bob Dudley of BP said the group was “back to growth” in the North Sea, which remained “one of the crown jewels” in its portfolio.
He said that BP had halved average production costs in the region from $30 a barrel in 2014 to less than $15 a barrel today and was aiming to reach $12 a barrel by 2020. Similar gains have been made by companies across the UK industry.
Ben van Beurden of Shell said the cost savings meant that certain North Sea re losing money when oil prices were above $100 a barrel were now profitable at current prices of around $50.
Speaking at the Offshore Europe event, Mr van Beurden said the risk of a “death spiral” had been real if companies had decommissioned uncompetitive infrastructure, putting undeveloped oil and gas out of reach.
“That big risk… looks to have been averted,” he said.
However, even after recent improvements, the UK remains one of the most expensive places to produce offshore oil md gas, with average costs above those of rival basins such as the Gulf of Mexico, Brazil and neighbouring Norway.
North Sea production has been rising since 2015 – reversing a 15-year slump — as several new projects have come on stream. This growth is expected to continue until at least 2019, aided by the completion this year of BP’s £4.4bn Quad 204 project west of the Shetlands and the expected start-up next year of its £4.5bn Clair Ridge expansion. These projects are set to double BP’s UK production to 200,000 barrels a day by 2020.
Lloyd’s Register (LR) has certified the first part produced by additive manufacturing for the oil and gas industry.
The part, a titanium gateway manifold for pipelines, was designed by Surrey, England-based Safer Plug Company (SPC) and built by the AM production company 3T RPD using powder bed fusion. The entire process was overseen and certified by LR using its framework, an industry first that guides manufacturers on AM processes to certify components.
“In taking on this initiative, LR’s Additive Manufacturing group has truly opened a gateway to the future,” said Ciaran Early, SPC Technical Director. “LR’s pivotal role is to guide suppliers through the codes, standards, controls and best practices to manufacture AM parts, in order that end users will have full confidence that an AM part meets the required level of criticality for that part.”
SPC approached LR more than a year ago in order to provide independent assurance of the manifold’s manufacture, due to the innovative process it went through to design and produce it. The manifold is to be included in an assembly for a suite of pipeline isolation tools, which will include the world’s smallest tool suitable for six-inch diameter pipework.
“This project is a great example of how innovative companies are making great use of additive ‘Manufacturing’s benefits,” said Amelia Stead, LR AM Surveyor and the primary technical lead on the project. “This part would have been nearly impossible to produce using traditional manufacturing techniques due to its complex internal channels.”
LR’s framework, produced alongside The Welding Institute (TWI), takes into account more than material standards. The manufacturing facility was also assessed by the LR team.
‘It’s crucial that new technologies are embraced by the oil and gas industry,” said Andrew Imrie, LR Global Product Launch Manager. “LR is at the forefront of supporting these new technologies, enabling the industry to bring certified products to market with the proper assurance and confidence.”
LR is involved in several AM projects within the nuclear, marine and construction industries as well. It currently operates three joint-industry projects with TWI which are open to companies who’d like to learn more about the AM process.
The number of job losses in the UK oil and gas sector was worse than expected last year, a major report has said.
Trade body Oil & Gas UK’s annual report said 60,000 direct and indirect jobs were lost across the industry in 2016, more than the 40,000 it had predicted.
The report said the sector could lose another 13,000 jobs in 2017. However, it suggests that while some companies are still reducing headcount “the largest reductions may now be behind us”.
The oil and gas industry still supports more than 300,000 jobs across the UK but that is 150,000 less than the peak in 2014, the report said.
According to the trade body report: “There are tentative signs that investor confidence is starting to return to the sector.
It highlights the fact that almost $6bn (£4.6bn) was invested in UK continental shelf assets and acquisitions in the first half of 2017.