Close
Social
Social
Often overlooked but potentially hugely valuable assets
Often overlooked but potentially hugely valuable assets
Whether an offshore
field is marginal depends upon many factors including oil price, subsurface
characteristics and the proposed development plan. Timing is also an important
influence. A Field Development Plan, FDP, will often have been prepared, approved
with finance secured only for changes in the external environment to create the
judgement that it is marginal; in simplistic terms, it will remain marginal
until that external environment changes.
Other fields may
never have progressed to the development phase but be deemed marginal as a
result of, for example, appraisal drilling results not matching expectations or
the proposed development solutions not delivering the rates of returns
required. And, it should be remembered that each project is competing for
investment capital.
Furthermore, there
are many oil and gas fields where major uncertainties related to exploration
and appraisal have been removed which are classified as marginal fields (with
stranded fields a subset of these) but their ‘marginality’ is not a permanent
condition. If this can be changed, these projects become not only economic but
also far less risky because the time to development is shorter and the expected
production outcomes are more certain.
Estimates of
developable marginal fields suggest they contain resources of approximately 80
billion barrels at $50 rising to around 130 billion barrels at $75 per barrel. Even
if only 15% of these resources can brought onstream economically and with
returns that make the projects investable, then there is a population of
opportunity of the order of 12 billion to 20 billion barrels ‘locked’ in these
fields.
With the long lead
time of major offshore projects, marginal field developments can be a much
faster way to generate production in the offshore oil sector.