Some 65 MMboe will be left untapped offshore Norway due to the early shut down of fields and the failure of the Vette project to meet economic margins, according to a report by the International Energy Agency (IEA).
The IEA's April Oil Market Report says a string of newly planned field shutdowns will cut production by 30,000 b/d. Taken together with Det norske looking likely to drop its plans for the Vette field, a total 65 MMboe could be left in the ground, the IEA says.
But, the IEA warns, early field shut downs is not the biggest concern. "Perhaps more significantly longer term, however, is the delay and the potential risk to projects such as Snorre2040, which will extend the lifetime of the field by adding 200-300 MMbbl of recoverable reserves, and the development of other major finds such as Johan Castberg."
Production up, but...
The report says, while a raft of newly commissioned facilities have reversed a decade long decline in oil production, aided by investment in enhanced oil recovery methods, future growth looks at risk, as the lower oil prices have resulted in slashed upstream budgets and new and existing fields being re-evaluated.
As an example, Det Norske is understood to be contemplating scrapping the development plan for Vette, previously known as Bream, says the IEA. Det Norske bought off Premier Oil last year, but "weak prices and lower potential production is challenging the economics of the project forcing its closing," the report says. A final decision is due to be taken with the firm's partners in the license.
Shut downs
Among the fields being shut in are Volve and Veslefrikk. Statoil decided to shut down Volve by end-2016, says the IEA, years later than its initial life expentency. The same trend cannot be said for a string of other fields.
Dong Energy intends to shut down its Oselvar field, more than a decade earlier than planned, and just five years after first oil in 2013. Dong has reportedly seen a significant decline in recoverable reserves as reservoir pressure has dropped faster than expected at Oselvar, and might be looking to use parts of the infrastructure at the Centrica operated Butch field on the UK side, the IEA says. Dong is now looking to shut down Oselvar, which is currently producing only 2000 b/d, as early as 2018.
Statoil is looking to shut the Veslefrikk field, two years earlier than planned as production has slipped to 6000 b/d amid low oil prices. An application has been filed with the Ministry of Petroleum & Energy to halt production in 2Q 2018, coinciding with a planned stoppage on the Oseberg field that shares its export route with Veslefrikk, says the IEA. Statoil is set to make a final decision on the shutdown of the field in 2H 2017, with submission of a decommissioning plan presently scheduled for Q1 next year.
Poor economics also led Repsol to shut down its small Varg field, which produced 5000 b/d in January, five years ahead of earlier plans. The FPSO is scheduled to leave the field by 1 August.
Similarly, ExxonMobil will retire its Jotun field five years early this October, meaning that Det Norske’s Jette field, which is tied back to the Jotun B platform, will also cease production. Moreover, the Jette field has been producing mainly water in recent months with oil and gas recovery being hit by reservoir and under-performing well issues, effectively making the field no longer commercially viable, says the IEA report.
Outside Norway
First oil from Dong‘s Hejre oil project in Denmark has been delayed from its scheduled start up in 2017. In its 2015 annual report released in March, Dong Energy announced that the project “continues to be in a challenging situation and that first oil in 2017 is no longer a likely scenario”. Dong Energy and partner Bayerngas terminated the engineering, procurement and construction contract for the production platform, holding the supplier consortium, consisting of Technip France and Daewoo Shipbuilding and Marine Engineering in breach of its contractual obligations.
UK
In the UK, field shutdown announcements have been so far been limited. One exception is Maersk Oil, which has sought approval from UK authorities to shut the North Sea Janice field in Q2 or Q3.
But, UK lobby group Oil & Gas UK warns that the number of mature fields expected to cease between 2015-2020 has jumped by 20% over the past year to more than 100.
Read more
Hejre in limbo as DONG drops EPC contract
Images: Top, the Janice floating production facility, from Maersk Oil. Middle, fields facing shut-in, from the Norwegian Petroleum Directorate. Bottom, Dong's Hejre jacket, now installed but without topsides.
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