The North Sea will become increasingly dominated by oil and gas majors , closing the curtains on a period of highly competitive drilling and trading, according to new research.
Data specialists Welligence Energy Analytics has predicted that the likes of BP, Equinor and Shell will account for over 40 per cent of production by the end of the decade.
According to research shared with trade publication Energy Voice, it predicts the development of the largest untapped fossil fuel reserves such as Rosebank and Jackdaw – which are being developed by Equinor and Shell respectively – will change the dynamics of offshore energy sector.
Welligence said: “Both M&A activity, combined with new field start-ups, are a proxy for the majors’ fluctuating share of production.
“The development of large projects, such as Rosebank and Jackdaw, which require deep pockets and where the majors have material or operated positions, means their share of production is set, once again, to rise to over 40 per cent by the end of the decade.”
Shell and Equinor consolidate growth plans
Shell gave the green-light of the Jackdaw gas field in July, and has pledged £500m in UK investment to deliver it.
At peak production rates, of around 40,000 barrels of oil equivalent per day, it could account for over six per cent of projected UK North Sea gas production.
Jackdaw is projected to start up production in 2025, located about 155 miles east of Aberdeen, Scotland.
Meanwhile, Equinor is set to make a decision on Rosebank in 2023, though an environmental statement for the West of Shetland project was submitted earlier this year.
The £8.1bn project is estimated to hold 300m barrels of oil, with first production targeted for 2026.
Welligence said: “Since 2010, the majors’ share of production has been in flux. Large asset deals between 2010-2015 reduced their footprint, such as sales by TotalEnergies, ExxonMobil and bp to Centrica, Apache Corporation and Mitsui & Co., Ltd. respectively.
“More recently, growth of North Sea-focused independents like Harbour Energy, Ithaca Energy and New European Offshore has facilitated sales by Chevron, ConocoPhillips and ExxonMobil, which have all but exited the region.”
Offshore body calls for more North Sea projects
The UK produces around 45 per cent of its gas domestically – and relies on Norway as its chief overseas partner, which meets 38 per cent the country’s gas needs.
The Climate Change Committee, Westminster’s independent advisory group, predicts half of the UK’s energy requirements between now and 2050 will still be met by oil and gas, and as much as 64 per cent of UK energy needs between 2022 and 2037.
The UK is a mature basin, the and the NSTA has warned in its resources report that without further exploration the UK faces a cliff edge in production decline and increased reliance on imports.
OEUK recently published its economic report on the sector, which revealed that just five exploration wells were drilled last year.
This was the lowest total since the North Sea sector was opened up to development nearly 60 years ago.
However, the offshore body currently has sight of around £26bn of capital investment opportunities at various stages by 2030.
If all are progressed, this could deliver more than 4bn barrels of oil and gas (37 per cent gas and 63 per cent oil) by the end of the decade.
Oil and gas exploration both feature in the UK’s energy security strategy, although the Government is under increasing pressure not to expand the windfall tax amid concerns it could deter investment.
The Government is grappling with the need to boost investment in the North Sea and oil and gas producers raking in record war-fuelled profits amid a cost of living crisis.