An EIC report found $178 billion of current or proposed investment in U.K. and Norwegian offshore sectors with more than $50 billion in FPSO-related investment and more than $110 billion in subsea spending.

And, as U.K. Energy Minister Charles Hendry said, “This year seems to be shaping up to be our best year for new developments in at least a decade, on par with some of the very early years of the industry. We are tracking a number of significant developments coming forward and I am keen to see some of the substantial value of these developments coming to the U.K.”

The report by EIC, a trade association for U.K. companies that supply equipment and services to the energy industries, showed that the U.K. and Norway currently have 168 and 117 offshore projects, respectively, being proposed for development or currently under development with an investment value of $106 billion for Norway and $72.75 billion for the U.K.

Presented at Offshore Europe 2011 Conference, the report, An Overview of the UK and Norwegian Oil & Gas Sectors, was based on data from the EIC’s database, EIC DataStream, and was produced by EIC Consult, its new market research and consultancy service.

Key established projects cited in the report include the Mariner and Bressay heavy-oil fields off the east of Shetland and the Schiehallion and Loyal fields on the U.K. Continental Shelf (UKCS).

Hendry, continuing to promote the region, said at the event, “The U.K. has a proven ability to contribute in a major way to these developments, from our preeminent front-end engineering and design to our excellent control systems, through to our world-leading subsea technology and skills. Our fabrication sector also has a high quality record in building jackets and topsides and has the capacity and capability to win a significant percentage of the work we see coming.”

Mike Major, EIC chief executive, stated, “It shows that there are significant business development opportunities and levels of investment throughout the North Sea with the region playing host to some of the world’s leading and most innovative field development projects.”

In terms of specific investment spending, the report found that the FPSO/FSO/FPU market remains strong with a potential total investment value for FPSO-related projects of $22.55 billion offshore Norway, and $28 billion offshore the U.K. Currently, there are 31 FPSO-related projects in the U.K. and Norway offshore sectors with 11 in Norway and 20 in the U.K.

The subsea market also remains strong, according to the EIC, with investments in current and proposed developments estimated to be $50 billion in the U.K. sector and in the region of $62 billion in Norway. Key developments include the Skarv, Snadd and Idun oil and gas fields, offshore Norway, and the Laggan and Tormore gas and condensate fields.

Other key issues detected in the report included the significant fast-tracking of projects, with considerable opportunities for the energy supply chain, more exploration activity being seen in the Norway than in the U.K., and the growth of smaller players.

The report found that Statoil remains at the forefront of the fast-tracking of new projects as the operator tries to get some smaller discoveries online as quickly as possible. Two such examples are the Krafla oil discovery and Visund South oil and gas field. The Krafla field was only discovered in May 2011, yet is due to go online in 2013. The Visund South oil and gas field is due to go into production in 2012 with the value of the project at $962 million.

The report also noted that Norway is currently leading the way in terms of new discoveries. One discovery which could be potentially significant is the Skrugard oil and gas field, where Statoil is the operator and where the distance from the nearest land is 200 km.

In addition, the recently revised estimates for the Aldous and Avaldsnes oil discoveries in the North Sea at between 500 million and 1.2 billion barrels of recoverable oil equivalent make the field potentially the largest find in the North Sea since the 1980s.

Finally, the report also noted the growth of smaller players in the U.K. offshore sector that are having a key impact today. Examples include the Lancaster and Whirlwind oil discoveries west of Shetland, operated by Hurricane Exploration; Orlando oilfield on the UKCS that was originally discovered by Chevron and where the operator is now MPX; and the Bentley heavy-oil field, again on the UKCS, where the operator is Xcite Energy.

Hendry is focusing on having the North Sea remain a competitive region for investment and exploration. “That is why I decided to refocus Pilot (a government and industry task force). At our Pilot meeting in March we agreed to focus on three areas. First, to look at the nationally important infrastructure we have in the North Sea and to consider how its maturity will impact the limited window of opportunity we have to develop the resources that lie in its hinterland.

“Around 50% of the infrastructure we have is past its design life and the workgroup will consider how we reconcile this with the need to fully develop the current known reserves and the yet-to-find deposits, which will help us reach the full productive potential of the UKCS.

“The second area is improving recovery. Currently, the U.K. recovers only around 38% of the hydrocarbons in the reservoirs. Increasing this by even a small amount would be hugely beneficial -- each additional percentage of recovery could be worth more than $20 billion.

“The third work area is access to capital. We see a lot of the new discoveries and developments being driven by small operators’ strength of approach and they can find accessing funds challenging. A workgroup is looking at the issue to see if there are improvements that could be found,” he continued.

Contact the author, Scott Weeden, at sweeden@hartenergy.com.

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