Marine Industries Global Market Analysis - Marine Institute

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96 MARINE INDUSTRIES GLOBAL MARKET ANALYSIS Figure 17.3: Offshore Oil & Gas – European Expenditure 17.4 OFFSHORE EUROPE Two countries, Norway and the UK are forecast to account for 86% of European expenditure over the next five years, the remainder being mainly divided between Denmark, the Netherlands, Italy and Ireland. Although there could still be some significant discoveries, capital expenditure is already seeing decline, but operational expenditure will remain high for many years. With the oil majors exiting the North Sea for other regions, considerable opportunities remain for small oil companies and in this respect, the UK sector is seen as one of the world’s most attractive ‘plays’. There are many small undeveloped fields (up to 250 in the UK sector) and these offer opportunities for development by tie-backs of subsea wells to existing platforms and pipelines. In addition, there are many prospects for new companies to acquire existing ‘brown fields’ from the existing oil majors Source: Douglas–Westwood and EnergyFiles 17.5 IRELAND OFFSHORE Ireland borders a large area of the north Atlantic margin including the Rockall Trough and the Porcupine Basin, due west of the Celtic Sea. However, there has been limited success with the only commercial production being from gas fields. Three gas fields have been brought into production whilst one will begin producing in 2005. Marathon’s Kinsale Head field came onstream in 1978 in the Celtic Sea and met Ireland’s gas needs until 1996, when a pipeline was built to import gas from the UK. Kinsale Head and the nearby small Ballycotton field are in decline but this area has seen other small discoveries. Ramco brought the Seven Heads field onstream in December 2003 using a five well subsea system tied back to the Kinsale Head A platform, where the gas is processed and exported through the existing pipeline to the Inch Terminal near Cork. Production peaked at 2.1 million cubic metres per day and in late 2004 production was restricted to 0.7 million cu m/d as the data was assessed. The Corrib gas field was discovered in 1996 in 355m water depth in the Porcupine Basin some 80 km west of County Mayo.The field has eight planned subsea wells tied back to an offshore pipeline. Reserves are around 70% the volume of Kinsale. A processing terminal is planned in County Mayo.The field is expected to go into production in 2006–7.
MARINE INDUSTRIES GLOBAL MARKET ANALYSIS 97 The World Offshore Oil and Gas Forecast 66 suggests that it is fairly unlikely that further gas finds on a par with Kinsale Head and Corrib will be found and assumes that Ireland will reach peak gas output at around 2.8 Bcm per year (more than double 2004 rates) in 2006 and then slowly decline as additional smaller finds in the Celtic Sea are brought onstream. It is forecast that 1.9 Bcm will be produced in 2015. Although some small oil discoveries have been made in the Celtic Sea no oil production has been achieved from Ireland and none is forecast in the period of this report except for negligible amounts of condensate. Figure 17.4: Subsea Field Development Costs 17.6 OFFSHORE ACTIVITIES Initial exploration is mainly by the use of seismic surveys. Drilling is a major activity with about 1,000 exploration & appraisal wells drilled each year and more than 2,000 development wells creating a total annual expenditure exceeding $37bn in 2004. Source: Douglas–Westwood Drilling and completing wells can form 50% of the costs of developing an offshore field.The other major items are fixed and floating platforms and pipelines. Fixed platforms are still the main development method with over 6,400 estimated to have been installed in the Gulf of Mexico to date (mainly very small ones). The North Sea has some 600, with a combined weight of 12 million tonnes. Where economics do not permit dedicated platforms, fields are often developed by wells completed on the seabed and ‘tied back’ (connected) to platforms. This is particularly the case for small fields and fields of all sizes in deepwater. In many instances, particularly in deepwater, subsea wells are tied back to floating production platforms. As a region matures Capex declines and Opex dominates – this is becoming the case with the North Sea. Eventually, fields reach the end of their productive life and are decommissioned. Over 100 small platforms per annum are removed from the Gulf of Mexico. Due to its larger structures decommissioning will eventually become a major activity in the North Sea. 66 Douglas-Westwood Limited, 2004.
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