Some operators have pressed ahead on notable offshore projects in the Norwegian North Sea and Gulf of Mexico despite a collapse in oil prices during the last 2 years.
In the North Sea, Statoil ASA slashed its spending estimates for giant Johan Sverdrup field, saying more efficient drilling and better contractor terms both helped trim costs.
"We are now seeing the results of good cooperation between Statoil, its partners, and suppliers, Statoil Chief Executive Eldar Saetre said late last month.
Consequently, Saetre reports reduced investment requirements along with greater capacity, a bigger resource estimate, and higher field value.
Statoil revised its Johan Sverdrup Phase 1 spending outlook to 99 billion kroner from 123 billion kroner. Full-field investment was improved to 140-170 billion kroner from 170-220 billion kroner.
Phase 1 production capacity currently is estimated at 440,000 b/d up from an earlier range of 315,000-380,000 b/d.
Statoil plans to expand the Johan Sverdrup production capacity by introducing an extra processing platform, boosting anticipated full-production capacity to 660,000 b/d.
The full-field resource estimate was improved to 1.9-3 billion boe from 1.7-3 billion boe.
The adjustments helped reduce the break-even price for the full-field Johan Sverdrup development to less than $30/bbl.
Stampede progressing
In the Gulf of Mexico, Hess Corp. reports ongoing progress with its $6-billion Stampede project-the company's largest deepwater development.
"The project leverages Hess's proven capability to safely execute deepwater development," said Stephen Whitaker, Stampede project director.
"When it comes onstream in 2018, we expect Stampede will provide a significant contribution to future growth," for Hess, Whitaker said.
Stampede lies 115 miles south of Port Fourchon, La., in about 3,350 ft of water. It spans Green Canyon Blocks 469, 511, and 512. Gross resources are estimated at 300-350 million boe.
The project calls for six subsea production wells and four water injection wells.
A tension-leg platform was sanctioned in 2014, Whitaker said, adding oil prices have plummeted since then.
Hess installed the 12 pilings in late 2015 and plans to complete the topsides and main deck yet this year.
Diamond Offshore's drillship Ocean Blacklion started development drilling this year. A second drillship, the Blackrhino, is expected in 2017, Whitaker said.
"Key suppliers are working together as a team," Whitaker told a Marine Technology Society Houston luncheon Aug. 25.
Stampede oil and gas reserves are Miocene reservoirs at a depth of 30,000 ft.
Backlogs disappearing
Offshore drilling contractors typically enter long-term contracts that provide some protection during oil-price downturns.
Contracts in place before 2014 helped during 2015 but the backlog of existing contracts is growing smaller.
Moody's Investors Service Assistant Vice-Pres. Sajjad Alam said a simultaneous collapse in drilling and contract expirations through 2018 is diminishing drillers' backlogs.
"In a depressed oil market, Moody's expects limited drilling opportunities, low dayrates, and short duration contracts-all pressuring backlogs," he said.
Alam said backlogs tumbled 47% for Moody's top 10 offshore drillers since 2014. He expects the decline will continue.
In other research, Moody's found the entire offshore drilling industry faces $110 billion in debt, much of it maturing in 2018.
Paula Dittrick | Senior Staff Writer
Paula Dittrick has covered oil and gas from Houston for more than 20 years. Starting in May 2007, she developed a health, safety, and environment beat for Oil & Gas Journal. Dittrick is familiar with the industry’s financial aspects. She also monitors issues associated with carbon sequestration and renewable energy.
Dittrick joined OGJ in February 2001. Previously, she worked for Dow Jones and United Press International. She began writing about oil and gas as UPI’s West Texas bureau chief during the 1980s. She earned a Bachelor’s of Science degree in journalism from the University of Nebraska in 1974.