Oil and gas producers in the U.K. North Sea increased output by more than 7% in 2015, the first rise in 15 years.

But the industry will be hard-pressed to sustain this into 2016 in a lower-for-longer oil price world, Oil & Gas UK’s CEO Deirdre Michie has warned.

She said, “While the U.K. offshore oil and gas industry is having to adapt to the low oil price and drive greater efficiencies throughout its operations, the fact is that the value of our product has more than halved. Times are really tough for this industry and for the people working in it. We will continue to see job losses as we move into 2016.

“As we go through these times, we have to be resilient and focus on what we need to do to get us through the coming months to ensure an enduring industry for the future.”

Despite the gloom, however, there are a number of projects due to come onstream that will help keep oil and gas flowing in the region.

Cladhan Field begins production
There already has been some good news for the U.K. sector at the start of 2016, with Abu Dhabi National Energy Co. (TAQA) bringing the Cladhan oil field northeast of Shetland onstream.

The field, which has been developed as a subsea tieback to the TAQA-operated Tern Alpha platform, is expected to produce 10 Mbbl/d.

The Cladhan Field is located in the northern North Sea in a water depth of about 150 m (492 ft) and straddles U.K. Continental Shelf (UKCS) blocks 210/29a and 210/30a. The development consists of two producer wells and one injection well.

Premier Oil’s Solan Field also is expected onstream imminently, although timing of startup is weather-dependent.

Solan is located in UKCS Block 205/26a in 135 m (443 ft) of water and is expected to produce about 40 MMbbl of oil at an initial rate of 24 Mbbl/d.

Two production wells and two water injectors have been tied back to a normally unmanned processing deck supported by a jacket.

Oil will be stored in a 45-m by 45-m by 25-m (148-ft by 148-ft by 82-ft) subsea tank prior to being offloaded to shuttle tankers. Premier said recent tanker trials have been successful, and commissioning work has continued.

Schiehallion, Loyal redevelopment
BP also will be busy in 2016 on its Quad 204 project, a redevelopment of the Schiehallion and Loyal fields, which will extend production out to 2035 and possibly beyond.

The Glen Lyon FPSO vessel is currently undergoing sea trials at the start of its journey from the Hyundai Heavy Industries yard in Korea to the west of Shetland, where it will serve as the hub for the 450-MMbbl Quad 204 development.

The project involves connecting and commissioning the new FPSO; the drilling of several new production and injection wells; and upgrading the subsea pipeline, manifold and wellhead infrastructure that will enable the full development of the reserves.

New subsea infrastructure includes five new production flowlines, one new dynamic umbilical, two new static umbilicals, six new risers and two new manifolds.

The new Glen Lyon FPSO vessel will be able to process and export up to 130 Mbbl/d of oil and store up to 800 Mbbl of oil.

The vessel will head to Norway in March or April for commissioning prior to startup toward year-end 2016.

Shell, meanwhile, has a swathe of projects on the horizon including Brent decommissioning, redevelopment of the Penguins Field and Brent Charlie and a subsea tieback
project on Fram.

EnQuest has multiple projects
EnQuest has revealed plans to build a new pipeline from its northern North Sea Thistle Field to Cormorant Alpha because of the decommissioning of the Dunlin Field infrastructure.

The current 16-in. Thistle oil export pipeline route runs 30 km (18.64 miles) to Dunlin before heading on to Cormorant Alpha and the Sullom Voe terminal, but Fairfield Energy’s decision to shut down Dunlin has left EnQuest in the lurch.

The planned pipeline highlights EnQuest’s desire to continue to invest in its North Sea assets.

The company, which is the largest independent oil producer in the North Sea, last year started up production on the Alma/Galia Field.

Plans are now being finalized for the next step in the Kittiwake project, with tiebacks planned from the nearby Scolty and Crathes fields. The company’s Quad 9 Kraken FPSO project also is on track, on budget and on schedule for first oil in 2017.

John Cowie, in charge of the northern North Sea area for EnQuest, said, “In the northern North Sea we’re the only people drilling. People are decommissioning and abandoning, but we’re the only ones making investments in the northern North Sea, and we’re doing that very successfully.

“We’re a lot more streamlined and agile than a supermajor. Everybody wants to know how we do it.”

Apache continues Forties, Beryl work
Cory Loegering, managing director of another nimble North Sea producer, Apache, said his firm has two of the most prolific North Sea hydrocarbon accumulations at Forties and Beryl.

Forties was acquired in April 2003 from BP for $630 million, and Apache has since invested $2.3 billion in infrastructure and $2.3 billion on drilling and workovers.

The Beryl area was bought in January 2012 from Exxon Mobil for $1.44 billion, and $300 million has since been spent on infrastructure.

Apache describes itself as an industry leader for operating costs in the North Sea. Its operating costs per barrel were $13.62 in 2015.

Loegering said Apache will be spending more of its capital on drilling in the future. In 2012 to 2015 the company allocated 51% of capital on drilling and completion, but this is due to jump to 78% during 2016 to 2020.

Inevitably, there have been some delays to projects in the wake of the oil price crunch, and Statoil has pushed production startup on its Mariner Field out to 2017. The average production is estimated at about 55 Mbbl/d of oil over the plateau period from 2017 to 2020.

Expected recoverable oil volumes are estimated at more than 250 MMbbl.

The field will be developed with a production, drilling and quarters platform based on a steel jacket with 50 active well slots and a floating storage unit of 850 Mbbl capacity.

There is plenty of activity planned in the U.K. North Sea in 2016 and beyond, but the industry will have to continue to raise its game to ensure it has a globally competitive and efficient base that continues to attract investment.

Michie added, “Even in these challenging times, we continue to have a supply chain that is the envy of the rest of the world as a center of excellence for offshore technologies. [It] generates tens of billions of pounds in domestic and export sales. It has a workforce with expertise that is unsurpassed globally and whose skills will be critical in helping us unlock the remaining barrels on the U.K. Continental Shelf. With up to 20 billion barrels of oil and gas estimated still to recover, there is good opportunity ahead.”

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