Dickson said that “too many of those projects” break even at more than $50/bbl, noting that “simplification, standardization, and optimization—not cyclical benefits—are the keys to new investment.”
Dickson observes many companies are now “moving to lower cost drilling techniques, scaling down vessel spec, and moving from large platforms to subsea.” Examples of optimization include more efficient drilling in exploration, with wells drilled 50% faster than in 2013, along with new technological approaches such as Asgard’s subsea compression, which adds around 300 million boe to the project (OGJ, May 2, 2016, p. 56).
WoodMac cites as an example Asgard operator Statoil ASA as among the companies benefitting from use of standardized and simplified well designs to cut time and costs. The Norwegian oil and gas firm also on Aug. 29 reported plans for reduced spending and increased production capacity on Johan Sverdrup field (OGJ Online, Aug. 29, 2016). Statoil executives calculated Johan Sverdrup will be profitable at below $25/bbl, down from the company’s February forecast of below $30/bbl.
WoodMac’s research shows that subsea equipment, drilling, and seismic will see the most cost deflation in 2016. Based on the firm’s recent survey, independent oil companies are more optimistic about further deflation in 2017, while the supply chain foresees an earlier demand uptick curtailing deflation.