The newest spherical of offshore licensing for the North Sea has been essential for the rise in smaller new gamers bidding for blocks. The development is all of the extra vital when massive gamers like Total announce they’re placing all their North Sea belongings up on the market. Are we seeing the daybreak of a brand new period of small firms dominating the North Sea?

Despite fears of a decline in recent times, the North Sea stays one of many greatest and most essential offshore oil and fuel areas on the earth. Following transformative oil worth crashes in 2008 and 2014, operations have develop into extra streamlined, with firms making the most of new applied sciences to economise actions at ageing fields.


In May, the UK Oil and Gas Authority (OGA) awarded 123 exploration licences as a part of the 30th Offshore Licensing Awards. The awards cowl 229 blocks or part-blocks, spanning an space of 26,659km². This is a giant enhance for the UK Continental Shelf (UKCS), and if all the licences are taken up by the 61 firms awarded them, whole acreage held will enhance by 50%.

“Despite the troublesome financial surroundings, trade responded strongly to the 30th Offshore Licensing Round confirming the excessive remaining potential of the UKCS,” says OGA head of exploration Nick Richardson. “The spherical targeted on ‘mature’ areas with present infrastructure, which offered firms with a wonderful alternative to take a contemporary have a look at a big stock of alternatives from which to rebuild their portfolios to assist maintain future manufacturing.”

One of the extra shocking traits this current spherical has highlighted is a transfer away from massive oil and fuel firms to smaller exploration and manufacturing (E&P) firms. But what can they convey to the area that the large gamers can’t?

The rise of the small producers

The very first thing to notice is that plenty of the Big Six oil and fuel producers have began to maneuver away from the North Sea. Total introduced in July that it will divest plenty of its UK North Sea belongings, value as a lot as $1.5bn, together with a few of its shares of the Laggan-Tormore fuel subject, and the Golden Eagle, Dumbarton, Bruce and Keith fields.

As the North Sea matures, Total shouldn’t be alone in trying to transfer elsewhere. Chevron can be reportedly trying to divest a few of its belongings, with youthful fields holding higher potential over an extended time frame.

However, as these massive gamers transfer away, the house is opening up for smaller E&P firms. These firms, akin to Neptune Energy and Tangram Energy, have an a variety of benefits over their bigger counterparts. “They are resilient and adaptive with a powerful give attention to being match for the long run,” says Richardson.

The second essential level is that there’s nonetheless an estimated 1.5 billion barrels of oil equal (boe) assets in undeveloped discoveries on the UKCS. Previously, a lot of this was too small or troublesome to entry, however know-how and greatest practices have modified, offering alternatives for smaller, extra agile firms.

“Smaller E&P firms are inclined to have an a variety of benefits over bigger operators that may give them a strategic benefit,” continues Richardson. “Many have nimble decision-making processes, permitting them to behave rapidly to develop and discover, and adapt to the altering enterprise and funding surroundings.”

Many of those firms have develop into specialists in particular manufacturing methods, making the most of the fast-advancing technological panorama to compensate for his or her scale.

“Often such firms even have robust technical specialisms that may be utilized to explicit subsurface and engineering issues to unlock assets the place bigger firms have beforehand tried with out success,” says Richardson. “Where firms lack the size of the majors and supermajors, they should be rather more open to collaboration with their neighbouring operators, provide chain and infrastructure house owners to understand the complete financial advantages.”

Regulatory modifications in plenty of areas are additionally…

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