Offshore O&G: Cuts, Delays in Norway as Costs Soar

Posted by Greg Trauthwein
Thursday, April 24, 2014
Home: http://www.npd.no/en/Publications/Facts/Facts-2012/Preface1/

More oil and gas projects in Norway could be put on hold because of rising costs, adding to a growing list of developments that have been delayed or called off, Bente Nyland, the head of the Norwegian Petroleum Directorate said on Thursday.

Most vulnerable will be small fields, projects to increase the recovery from producing assets, and new finds further than 40 km from existing infrastructure, Nyland told Reuters.

Oil firms are cutting back on capital spending across the world as years of cost inflation has squeezed margins, cutting back their ability to pay dividends.

Norway, where the per unit cost has increased 10-fold in 10 years has already fallen victim to cuts. Statoil earlier this year sharply reduced its investment budget while Shell this month called off a multi-billion dollar project to increase recovery at its Ormen Lange gas field.

Statoil's $15.5 billion Johan Castberg find in the Arctic, put on hold last year because of high costs, is also hanging in the balance but Nyland said she expected Statoil to eventually go ahead with the development.

"Increased costs will of course reduce the profitability of ongoing projects and might put a project on hold. The value of the future project will also be reduced," Nyland said.

"Costs are high and we know that companies have announced stronger investment discipline."

"We are afraid that this will cut some of the 165 (planned) projects to improve recovery and it might also stop the development of some of the 88 discoveries ... probably some of them will never be realized if this cost growth continues."

Increased oil recovery tends to be a low margin business and relies heavily on drilling new wells, a problem as drilling costs have doubled over the past decade.

With oil prices seen falling over the next two years and drilling costs staying high, spending on getting more out from fields can easily be abandoned, Nyland said.

"When the cost is increasing, you stop two things: exploration and increased oil recovery projects."

Developments in the Barents Sea in Norway's Arctic could also be at risk because they tend to be much further from shore than fields in the North Sea and the area lacks infrastructure.

(By Balazs Koranyi, Editing by David Evans)

Maritime Reporter July 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Offshore

BSEE Updates Hurricane Reporting Requirements

BSEE is providing updated guidance for the current and future hurricane seasons through a Notice to Lessees (NTL) released July 27, 2015. NTL 2015-G02 clarifies

Offshore Wind Shift to Drive Vessel Services Cooperation

Evolving procurement processes for U.K. Round 3 offshore wind farms will require a greater number of work streams, personnel with new and differing skills, and

ABB hands over Germany’s DolWin1

DolWin1 integrates 800 megawatts (MW) of clean energy into the German transmission grid ABB, the leading power and automation technology group, has successfully

Finance

Work Begins on $1.6 bln Container Terminal at Jebel Ali Port

DP World Chairman Sultan Ahmed Bin Sulayem announced the start of construction work on a brand new container terminal at Jebel Ali Port, Dubai.   Phase 1 of the

Singapore MPA Wants LNG Bunkering Options

Singapore's Maritime Port Authority is seeking proposals on liquefied natural gas bunker supplies as it shifts away from fossil fuels towards gas while trying to

China's Navy Drills in South China Sea

China said it conducted air and sea drills in the South China Sea on Tuesday as it stakes an increasingly assertive claim to virtually the whole sea despite rival claims by neighbours.

Energy

Idreco Delivers Dredger for Hydro-Dam in Congo

Idreco (International Dredger Constructions) of the Netherlands informs it has designed, built and installed its second dredger, an ISD 600 with a digging depth of 30 meters,

Offshore Wind Shift to Drive Vessel Services Cooperation

Evolving procurement processes for U.K. Round 3 offshore wind farms will require a greater number of work streams, personnel with new and differing skills, and

Damen Delivers First Twin Axe FCS for O&G

Damen Maaskant Shipyards Stellendam have a decade-long relationship with the family-run Groen Offshore, Guard & Support, having built seismic research vessels and

Government Update

BSEE Updates Hurricane Reporting Requirements

BSEE is providing updated guidance for the current and future hurricane seasons through a Notice to Lessees (NTL) released July 27, 2015. NTL 2015-G02 clarifies

Singapore MPA Wants LNG Bunkering Options

Singapore's Maritime Port Authority is seeking proposals on liquefied natural gas bunker supplies as it shifts away from fossil fuels towards gas while trying to

China's Navy Drills in South China Sea

China said it conducted air and sea drills in the South China Sea on Tuesday as it stakes an increasingly assertive claim to virtually the whole sea despite rival claims by neighbours.

Offshore Energy

BSEE Updates Hurricane Reporting Requirements

BSEE is providing updated guidance for the current and future hurricane seasons through a Notice to Lessees (NTL) released July 27, 2015. NTL 2015-G02 clarifies

Offshore Wind Shift to Drive Vessel Services Cooperation

Evolving procurement processes for U.K. Round 3 offshore wind farms will require a greater number of work streams, personnel with new and differing skills, and

Damen Delivers First Twin Axe FCS for O&G

Damen Maaskant Shipyards Stellendam have a decade-long relationship with the family-run Groen Offshore, Guard & Support, having built seismic research vessels and

 
 
Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Offshore Oil Pod Propulsion Port Authority Salvage Ship Electronics Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.6304 sec (2 req/sec)