Business Outlook 2019

BUSINESS OUTLOOK 2019

OGUK expects that levels of capital investment will stabilise in 2019 and 2020, with the potential for a marginal increase to £5–£5.5 billion this year; this will be driven by the growth in new field approvals seen in 2018. Companies are having to work harder than ever to create business cases to bring investment to the UK amid strong international competition and tight budgets, however the significant increase in new projects last year demonstrates the attractiveness of the basin. Thirteen new fields and/or field redevelopments were approved by operators and the OGA in 2018, three more than the previous three years combined. Overall, these approvals have an average capital investment of £8 per boe, unlocking more than £3.3 billion of new investment, and are expected to produce more than 400 million boe throughout their operational lives. These projects have benefitted from improvements in unit development costs of up to 50 per cent since 2014. The basin has also seen new brownfield investment to upgrade existing facilities and put new export routes in place, helping to ensure maximum economic recovery from existing fields.

Figure 15: New Fields Approved in 2018

Penguins Redevelopment Garten Ballindalloch Columbus

Alligin Arran Finlaggan Captain EOR Vorlich Fram Gannet E Buzzard Phase II Tolmount

Most of the projects approved in 2018 were subsea developments, with the majority being tied back to existing infrastructure. Only two of the projects will require the development of new host facilities: the Penguins Redevelopment project will consist of a new-build FPSO, and the Tolmount development will see the construction of a new platform and export infrastructure. Looking forward, most of the pre-development opportunities in the basin will be progressed using subsea infrastructure, making use of existing host facilities and export routes where possible in order to maximise value. Some of the larger projects will see the use of FPSOs, however, there are relatively few opportunities on the horizon which would require the development of new platform-based facilities. OGUK expects that 2019 will see a similar number of new projects approved as in 2018. The 12–15 projects likely to be approved could unlock £2.5–£3.5 billon of new capital and 300–400 million boe of new reserves. However, these commitments should not be taken for granted and will only be delivered if the attractive investment conditions are maintained.

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