The North Sea region spreading between the UK, Norway, Denmark and the Netherlands will see 63 oil and gas fields being brought to production between 2018 and 2023, of which 34 will be subsea tie-backs, says GlobalData, a data and analytics company.
The Gulf of Mexico (GoM) region shows a higher ratio of subsea tie-backs to total projects than the North Sea. There, a total of 30 projects are expected to come online until 2023, of which 23 are subsea tie-backs.
The North Sea however provides a higher average internal rate of return (IRR) – 45% – for subsea developments, compared to the average in the GoM, 32%, for the same development type. From the total estimated capital spending of $69bn for planned and announced projects in the North Sea, $14bn will be spent on subsea tie-back developments.
Luis Pereira, oil and gas analyst at GlobalData, comments: “Tie-back developments become ideal solutions for operators looking to maintain the short to medium term production outlook, providing a quicker return-to-investment when compared to larger stand-alone developments. Average payback time is less than six years, the shortest time for all development type solutions.”
By 2023 planned and announced fields in the North Sea are expected to contribute with 1.6mn barrels of oil equivalent per day of which 500,000 are expected to come from subsea tie-back projects. The subsea tie-back development option shows an average development net present value per barrel of oil equivalent of nearly $6 and an average IRR of 45%.
Pereira continues: “The rise of the number of subsea tie-backs projects in the North Sea is perhaps also due to the few large discoveries been made in the region, as is also the trend in the US GoM. These types of developments become an attractive solution for operators looking to fill the mid-term production outlook gaps with lower capital risks.”
