Seven years from now, Maersk Oil hopes to have broken through the 400,000 barrels oil equivalent per day barrier compared with current output of something over 200,000 bpd.
It’s a huge leap but do-able, according to CEO Jakob Bo Thomasen.
The company’s North Sea assets will play a major role in getting to that target thanks to the massive Johan Sverdrup oil discovery in the Norwegian sector; together with contributions from decent new UK assets such as Culzean and Golden Eagle.
Maersk-operated Culzean, for example, is expected to account for 5-10% of Britain’s gas production when it comes onstream, while Nexen-operated Golden Eagle, now in development, has gross recoverable contingent resources in the range 150-275million barrels of oil.
It is the responsibility of UK business unit MD Martin Pedersen to shepherd such projects as he seeks to build on current output of around 40,000bpd to 100,000bpd eventually.
“The 400,000 bpd is a 50% increase over where we are now so, following a decline in out entitlement production over the last year, we’re going to see it flatten out and then start slowly coming up towards the 400,000,” Thomasen told Energy.
“The UK is exciting in that context because it contains all the elements of getting to our target… exploration, development and maximising recovery from our existing assets.”
However, getting the UK North Sea business to where it is today has been a long-haul, hampered by a serious need to sort out the safety-related issues that were in essence part of the heritage of assets acquired in the mid-2000s from Kerr McGee.
Thomasen said there had been a total turnaround in UK sector safety performance and that was important for the future of the business.
Pedersen: “We were one of the worst performers in the UK… just after the acquisition (from Kerr McKee).
“We have seen significant improvement both in hydrocarbon releases and injuries. The situation is very different and the culture shows a different mind-set.”
Maersk’s approach is classic for a mature province… maximising production and therefore return from mature assets; exploring and appraising new opportunities within tie-back range of such assets; and hunting for fresh opportunities in new acreage. The company is also making heavy use of its prowess in seismic interpretation and modelling of difficult geologies, and in the drilling of very long and complex horizontal wells, including pushing the frontiers of fracking in tight sedimentary formations.
In the mature assets corner are fields like Gryphon, Dumbarton (ex Donan) and Janice (which lay at the heart of many HSE issues and went through a prolonged shutdown). There the challenge is sustaining output levels (and hopefully reversing declines) through infill drilling and tie-back exploration.
Infill targets are frequently very small and often not seismically visible sand bodies known as “injectites”. Get it right and they are worthwhile. The Gryphon asset area is a good example where injectite hunting is working to Maersk’s advantage.
The company has a history of successfully working difficult geologies and that track record starts on its home ground… the Danish North Sea and has been incredibly successfully extended to offshore Qatar with the Al Shaheen field that others thought the chalk geology, with a very thin oil rim, was unworkable. The Danes proved otherwise.
Back to the North Sea quest where reference has already been made to Johan Sverdrup and UK prizes like Golden Eagle and Culzean, but much of what is being found is small… mini-fields like Jackdaw and Balloch.
Pedersen: “A good example of bread and butter stuff is Balloch, which is a very nice discovery in the back yard, so to speak; a simple tie-back to the GP III production unit. The impact of this is quite significant; it’s about getting the best out of infrastructure, keeping the vessels filled up.”
This is where securing additional acreage proximal to existing licence holdings is so important.
“Our strategy in the 27th Licensing Round in which we were quite successful, was to build on the acreage that we already have in order to extend field lives,” said Pedersen. “For example, Quadrant 9 with the Gryphon is very significant; we believe there is a lot more to come from that area.
“We took the opportunity last year when the vessel was not there (it was off location because of mooring leg failures) to shoot 4D seismic so we have a brand new set of data of the area, moreover with much more resolution.”
So have the various concessions made by Treasury since its fiscal debacle of last year been of any help to Maersk’s UK business? Apparently so; Pedersen talked of a dialogue that appeared to be working.
Pedersen: “From what I’ve seen recently it is positive. Things are moving ahead… smaller discoveries in mature areas, larger discoveries West of Shetland and Cygnus in the south; there has also been positive impact on brown-field (mature assets).
“When I look at our business; certainly some of the initiatives are very important for us to move ahead. It is material.”
Thomasen warned that fiscal stability is a huge issue for Maersk… something that the UK has been demonstrably bad at managing.
“From the global perspective, when like us you are drawing global strategies and where different regions are competing for capital to invest, then one of the factors high on our list is fiscal stability.
“This is so important for us. We’re talking about investment horizons of 10, 20 and 30 years. It’s so important that it’s stable.
“In countries like Qatar, Angola and other places, they have been fiscally relatively steady. We have worked in Qatar for 20 years… it has not changed; it is rock steady.
“But the UK? That is a concern,” said Thomasen, adding that even little Denmark had that one sussed and where fiscal stability appears assured for many years to come.
Maersk (and others) clearly want to wring more concessions out of the Treasury on gas, especially the challenging stuff like high pressure/high temperature (HP/HT) of which Culzean is an example.
“If, for example, there’s what seems to be a significant gas discovery but which turns out to be marginal, then would it not be important for the UK to develop it anyway because it’s a resource? We would be prepared to go ahead but, of course, we need to have a reasonable return,” Thomasen added.
So it seems that, though the wider North Sea does stack up, the UK remains a worry.
Recommended for you
