UK North Sea Energy Review

By Tsvetana Paraskova

The progress in emissions reductions of the UK North Sea industry and the cost of decommissioning infrastructure, along with a number of supply contracts and asset sales, were the highlights in the UK oil and gas sector over the past month.

Total government revenues from UK Oil and Gas production stood at £248 million in the tax year 2020 to 2021, a drop of 71% compared to the previous year, the government said in July.

Over the past decade, government revenues from UK oil and gas production have decreased significantly, from £10.8 billion in 1984 to 1981 to £0.2 billion in 2020 to 2021, the government data showed.

OGUK launched at the end of June a major plan to cut emissions of methane, of the world’s most potent greenhouse gases. The key actions in the Methane Action Plan 2021 include 50% reduction in methane emissions by 2030, a target of UKCS methane intensity below 0.20% by 2025, zero-routine flaring before 2030. In addition, each company and offshore installation will develop its own Methane Action Plan by 2023, installations will seek to validate methane quantification wherever practicable by relevant measurements, and the industry will seek to align to international standards and reporting principles.

“We hope to see companies and other industries around the world adopting a similar approach, developing their own comprehensive guidelines to accelerate the drive for net-zero and reposition for a sustainable future,” OGUK Emissions Improvement Manager Thibaut Cheret said.

The Oil and Gas Authority’s (OGA) Technology Insights report showed in early July that net-zero and data and digital are increasingly key areas of focus for innovation in the oil and gas industry, alongside the core technologies for exploration, development, and asset operations.

Technologies for net-zero were for the first time reported in operators’ plans last year, including solutions for emission monitoring, flaring and venting reduction, and the use of renewable power offshore, the OGA said.

The authority also estimated in its 2021 Decommissioning Cost Estimate report that decommissioning costs had declined by 23% to £46 billion, marking steady progress towards the £39-billion by end-2022 target called for in the 2017 report.

“The industry is responding to the challenge to cut costs well, but it must maintain focus and increase the pace to hit the 35% target,” Stuart Payne, OGA Director of Supply Chain, Decommissioning and HR, said.

“We will also work to bring companies together – because collaboration and knowledge-sharing is key, companies must continue to step up and collaborate in this area,” Payne added.

The OGA’s overview of performance over the past year and expectations for the coming years showed that OGA interventions in 2021 have helped the oil and gas industry avoid producing 970,000 tonnes of future carbon dioxide equivalent – the same as taking 500,000 cars off the road for a year.

CO2 emissions from offshore installations and terminals fell 10% between 2019 and 2020, the report found. Flaring volumes also dropped, by 22% in 2020 – equivalent to the gas demand of 200,000 homes. Production efficiency has remained at 80% for a second consecutive year, while operating costs have fallen to £11.10 per barrel, the OGA estimates.

“We also look forward to seeing new field developments being electrified and we’re actively supporting electrification projects in their early stages in the Central North Sea and West of Shetland,” said Andy Samuel, OGA Chief Executive.

The National Oceanography Centre (NOC) said on 1 July it had secured funding from the UK Natural Environment Research Council (NERC), which will take robot submarine ‘Boaty McBoatface’ around end-of-life oil and gas fields. This funding has allowed the use of state-of-the-art technology to provide futureproof solutions for the oil industry and will test whether these robotic approaches can gather equivalent information to the surveys currently facilitated on research ships.

“Autonomous submarines could offer many advantages over current approaches; improving the quality and quantity of environmental information while cutting the cost and environmental impact for a survey ship and its crew,” said Dr Daniel Jones from the NOC.

Company news

Petrofac announced several contracts this past month. The firm has been awarded a two-and-a-half-year brownfield project with Ithaca Energy, valued at around US$17 million. The project is for stage two of Ithaca Energy’s

Captain Enhanced Oil Recovery (EOR) project in the UK’s central North Sea. Petrofac will be responsible for fabricating, constructing, and commissioning the topsides development, bringing to life Ithaca’s strategy to maximise economic recovery.

Petrofac also won a three-year contract extension from Neptune Energy valued in the region of US$14 million. The renewal, which comes into effect on 1 January 2022, includes provision of operations and maintenance services for Neptune Energy’s Cygnus Alpha platform in the Southern North Sea. Petrofac has been awarded a new three-year contract with ONEgas, an integrated cross-border asset between Shell UK and the Nederlandse Aardolie Maatschappij in the Southern North Sea.

Petrofac also entered into a strategic alliance with Storegga, an independent UK company pioneering carbon reduction and removal for a net-zero world, to fast-track net-zero infrastructure. Under the deal, Petrofac will provide capabilities, people, processes and systems to reinforce the technical development and management of Storegga’s growing portfolio.

Finally, Petrofac said it had collaborated with asset management specialist James Fisher Asset Information Services (JF AIS) to eliminate the need for offshore surveys ahead of modification scopes, reducing time and cost. The digital process enables offshore crew to capture detailed visual and measurement data through a process called Self-Capture Point Cloud. With the digital twin technology, Petrofac was able to undertake a spool piece replacement in the North Sea, avoiding the need to mobilise a survey team - a first for the UK energy industry, the company said.

Tailwind completed on 1 July the full sale of its interests in the Conwy field, including decommissioning, to Eni with all regulatory conditions satisfied.

Finder Energy has completed its acquisition of the highly prospective UK North Sea Goose licence, P2317, from Azinor Catalyst. The licence, located in the NW Witch Ground Graben of the Outer Moray Firth in the Central North Sea, covers an area of 292 square kilometres and is 175 km northeast of Aberdeen. The licence contains the drill ready Goose prospect that sits immediately adjacent to the Northern Flank of the Claymore field. Finder Energy currently holds an operated 100% working interest in this licence and is seeking partners to join in the drilling of the Goose exploration well in 2022 or 2023.

EnQuest completed the previously announced transaction to buy the entire 100% equity interest in the P1078 licence containing the proven Bentley heavy-oil discovery from Whalsay Energy Holdings Limited.

Tangram Energy has awarded Applied Petroleum Technology (APT) a master service agreement to provide basin modelling, petroleum systems evaluations, and geochemical analyses for the operator’s E&P activities on the UK continental shelf on a non-exclusive basis.

Serica Energy announced successful flow test results from the Columbus development well. A stabilised flow rate of 38.0mmscf/d of gas and 1,560bbls/d of condensate has been achieved through a 56/64ths inch choke. This rate was at the upper end of the pre-drill range of expected outcomes and was constrained by the surface well test equipment on board the Maersk Resilient Heavy-Duty Jack-Up drilling rig.

“Columbus is part of Serica’s ongoing capital investment programme which is aimed at boosting production in the second half of this year and beyond,” Serica Energy’s CEO Mitch Flegg said.

Neptune Energy awarded in July a subsea inspection contract for its operated Cygnus gas field in the UK southern North Sea to Geodata specialist Fugro. Fugro will use advanced inspection technologies, enabling data processing to be carried out onshore, reducing time and costs.

“By using our ROC in Aberdeen, we can complete these scopes from onshore while maintaining our high standards of data collection,” Daniel Jones, Fugro’s Director IRM Services for Europe and Africa, said.

Harbour Energy plc said on 15 July it had become a signatory to the World Bank’s ‘Zero Routine Flaring by 2030’ initiative. Harbour Energy is taking significant steps within its operations to reduce emissions and achieve its commitment to be net-zero for Scope 1 and 2 emissions by 2035, the company said.

“At Harbour Energy our purpose is to play a significant role in meeting the world’s energy needs through the safe and efficient production of hydrocarbons, while creating value for our shareholders,” Linda Z. Cook, CEO of Harbour Energy, commented.

Orcadian Energy has filed a revised concept selection for its Pilot field to include a significant improvement in process heat management and power generation efficiency. To further improve emissions performance Orcadian has also chosen to include a floating wind turbine in the development concept. Following a review by Crondall Energy Limited, these initiatives combined have the potential to reduce expected Scope 1 emissions from the development by over 80%, to 2.6 kgCO2e/bbl, Orcadian ¬¬Energy said.

UK NORTH SEA REVIEW

SPONSORED BY:

"OSSO is a value focused provider of specialist fluid temperature control and separation solutions."

www.ossoltd.com