Whatever situation our industry encounters, fundamentally it lives or dies by how well it drills and maintains its wellstock.
Yesterday, EnQuest released its Full Year Results, reporting outperformance in drilling in 2015 and we have continued excellent drilling performance into 2016.
While the sector rallies to tackle the immediate challenges of a “much lower for much longer” oil price, there is an even greater threat to the future of the North Sea – the high cost of drilling.
The UKCS is thought to hold up to 20 billion barrels of oil equivalent but current market conditions deem many development opportunities to be commercially unviable.
EnQuest is one of several operators supporting the 50% Challenge Group, launched by industry and supported by the Oil and Gas Authority and Oil & Gas UK.
It aims to establish a lower, sustainable cost of drilling and reverse the prior trend of increasing costs through increased collaboration, knowledge-transfer and equipment-sharing between companies.
We have reported strong production and operational performance for 2015 and have been managing our cost base down for some time, helped by starting well before the oil price decline.
We reported upper quartile drilling performance, using IHS Rushmore industry benchmarking data, across each of our operations. We were £29.6mm below budget and £19.3mm better than benchmark across all completed wells.
On our Thistle asset, an initial three-well programme was extended to six activities and the programme was delivered 25% under budget. The first three wells paid back around year-end with A61 – the most successful of the wells drilled – paying back in less than three months.
So how have we achieved this? Through effective leadership of an excellent team that is focused on delivery and has a no-nonsense approach: keep it simple; focus on the detail, and get it right first time.
We have developed our working relationship with our supply chain to put a greater than ever emphasis on competence, uptime and quality. As a result, we have reduced Non Productive Time incidents to a quarter of their previous level.
Our 2016 drilling campaign is focused on two projects, Kraken and Scolty-Crathes.
Kraken is our largest project to date and one of the biggest in the UKCS in recent years. The 23-well development is being drilled by the Transocean Leader; it is on schedule and expected to deliver first oil in the first half of 2017.
In December, with our partner MOL, we confirmed sanction of the Scolty-Crathes Development – the only pure oil offshore development approved by the OGA in 2015. It is a simple, two-well development north of our Kittiwake platform and extends Kittiwake’s field life to 2025.
The Stena Spey began drilling in February and once the Crathes well is complete, the rig will move to the Scolty well.
We will continue to focus on enhanced performance and to take advantage of further low-cost, fast payback drilling opportunities. Capability gives opportunity.
By its very nature, our industry is highly competitive. If some good has come from the current environment it is the unprecedented – and long overdue – industry collaboration and focus on efficiency and performance. It is essential if we are to give the future of the North Sea a fighting chance.
Neil McCulloch, President, North Sea, EnQuest
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