Page 50: of Maritime Reporter Magazine (May 2017)

The Norway Way

New Players:

A Seadrill Jack-up (Photo: Oyvind Hagen, Statoil)

As a mix of traditional heavy- weights and start-ups ? ght to keep Norway’s offshore industry a? loat, collectively they assess

The New RealityThe New Reality

OFFSHORE OFFSHORE

NORWAYNORWAY

Beneath some palpable yet halting movements deep-water oil and gas, that people kept saying,

Swedbank’s chief economist, Harald toward recovery in 2017, there’s 2016’s rigorous “Will offshore even be part of the future mix?”

Andreassen, isn’t “too hopeful” about cost-cutting by, among others, Statoil and its sub- Deepwater’s assumed breakeven of $65 made sea supply chain. Lower oil? eld cost estimates have Norwegians ask, “Have we been priced out of the the long-term prospects for the oil been proclaimed (and engineered), and this has fed equation?” Nikolaison says he’s had to tell people assertions that pricy technology and extra engineer- that up until 2016, “Shale producers had only been price, but then again, “I’m less certain ing drove costs until operators backed out of “de- drilling their best wells and spreads,” and that has of this than I’ve ever been as an econ- cision gate.” Andreassen says he doesn’t blame the been shale’s early price advantage. “We’re seeing technology companies. “It was the (oil) demand de- that the shale costs base increases over the next few omist,” he told a ? oating production struction when oil prices were high” that gutted the years,” although, “As (the industry) recovers, prices oil price and stacked rigs. After seeing companies will in? ate.” Mergers between “SURFS and SPSs” conference in Oslo. After two-and-half operate “in debt hell” with in? ation pinching, An- — or subsea service companies and subsea vendors dreassen now sees “the comeback from hell.” —have eliminated “PLEMS and PLETS,” those years of oil-price collapse followed by “If you’ve survived this far, then you’ll come back costly pipeline end points. Nikolaison has seen that layoffs in the thousands; stacked oil next year.” He then offered a long-term, ballpark the deepwater costs-curve was down 15% between “balance price” for oil at about $60. third-quarter 2016 and Q1 2017. (North Sea rim) rigs and order freezes for offshore ship-

That’s twice what oil was in January 2016 and offshore projects are now competitive at about $57

S enough for just about everyone. Rystad Energy part- oil. At that price, “There are lots of breakeven tie- ping, price insecurity itself is a partial ner, Lars Eirik Nikolaison, said that when he headed backs in the North Sea.” expression of con? dence.

up the number-crunching ? rm’s New York of? ce Near Oslo, a handful of offshore start-ups entered (until very recently), he heard the repeated refrain the fray just as the still-painful downturn was at its

William Stoichevski that shale’s $35 breakeven oil price so outpaced gloomiest. Part of an incubating program called 50 Maritime Reporter & Engineering News • MAY 2017

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