According to Wood Mackenzie, five themes will dominate the market in 2019, including the comeback of North Sea exploration and, although the deal spend will slow, it will remain the seller’s market. WoodMac also sees an increase in development expenditure in 2019 but production will remain flat. In the end, companies with the lowest-cost projects will be the winners this year.
- North Sea exploration is returning in 2019.
WoodMack foresees more than 60 exploration wells to reach more than 25% on 2018 across the region, including the UK, Norway, The Netherlands and Denmark. The company supports that there will be many new ideas and plays and in total the companies aim 10 million barrels of gross un-risked resource.
Norway will pave the way, with its drilling expected to reach pre-downturn levels, forecasting more than 40 exploration wells will be drilled, up from 27 in 2018.
UK started in 2018 with 8 well rigs, the lowest number since 1960s. Yet, it is expected to reach the 10-15 well rigs in 2019.
Equinor is the only major set to drill more than a handful wells in the North Sea this year. It will drill around 20 across UK and Norway – its highest number since 2013. Aker BP and Lundin are the next players in line as they look to secure growth post-Sverdrup.
- Although deal spend is expected to slow down, Woodmack forecasts big transactions.
It will remain a seller’s market. European majors will keep on optimising portfolios while the North American majors and large caps take centre stage as they focus on more attractive opportunities elsewhere.
- The North Sea recovery will be consolidated in 2019.
Major companies as BP and Shell, are still sanctioning projects. Woodmack expects an increase in development expenditure in 2019, with more than US$24 billion being spent on projects.
Also, Norway and UK are dominant with US$16 billion and US$7 billion of investment, respectively. But work at Total’s Tyra hub will also lead to a significant increase in Denmark.
Global competition for capital will remain an issue in 2019. The North Sea will benefit from the new group of focused players who are breathing new life into the region.
- The production will remain flat.
Operators will produce 6.3 million boe/d from the North Sea in 2019, with an almost equal split between oil 49% and gas 51%. Johan Sverdrup at nearly 3 billion barrels of oil, is the region’s biggest start-up in over 20 years.
Norwegian gas production will be close to record levels, in the meantime liquids production will decrease for a third year in a row to 1.8 million b/d.
In the UK, output will experience an increase by 4%. The first production will be from Mariner, Lancaster and Culzean.
Netherlands output will be hit following the latest production cap at Groningen. Denmark’s production will drop at the end of the year when Tyra shuts in for essential redevelopment work.
