UK North Sea Review

The opportunities ahead for the UK offshore workforce in the energy transition, a large proposed acquisition, new discoveries, and drilling and service contracts featured in the UK North Sea oil and gas industry at the end of 2023 and the start of 2024.

Offshore Energies UK (OEUK) published in December its Workforce Insight 2023 report, in which it said that the North Sea energy workforce offers an unrivalled pool of skilled oil and gas specialists that must be retained to power the transition to clean energy.

The report highlighted the fact that more than 90 percent of all those currently working in oil and gas production and its associated supply chain have skills that are potentially transferable to wind, carbon capture, usage and storage (CCUS), and clean hydrogen energy production.

According to the leading offshore industry body, it is vital that the transition from dependence on oil and gas is effectively managed to ensure the existing skills of these workers are taken into account so they can move smoothly into new roles.

If the UK manages to achieve a successful home-grown energy transition using existing skills, this could see the UK energy workforce rise by 50 percent with new jobs bringing the total number of people employed in the sector to 225,000 by 2030, the report says.

OEUK also called for a predictable and fair tax regime in the UK to ensure stability to operators and attract more investments in the UK North Sea. The Workforce Insight report has estimated that with the right incentives and stability UK offshore energy companies would invest up to £200 billion in home-grown renewable energy.

The industry body also proposes the creation of a dedicated skills co-ordinating body for each of the UK’s devolved nations to establish effective collaboration between employers and education providers. This would ensure a continuing pipeline of highly skilled and trained workers in areas such as electrical maintenance and pipefitting.

Finally, OEUK is seeking a joint commitment between government and industries to deliver a ‘Skills Passport’ which will help to capitalise on the highly transferrable skills of the oil and gas workforce, show career pathways between related sectors, and help ensure that people can move efficiently back and forth.

“This cannot be a debate about oil and gas versus renewables. We need to support both oil and gas and renewable energy since they are increasingly the remit of the same companies and the same people,” said Katy Heidenreich, OEUK’s director of supply chain and people.

“If we get this investment it will mean the UK can scale up to reach 50GW of wind and 10GW of hydrogen, and speed the development of at least 4 clusters of carbon capture and storage projects by 2030,”Heidenreich added.

“That is what the future could look like, but our research shows we need more action to address skill shortages and to recognise the huge value in the existing workforce.”

Crude oil production from the UK North Sea “is becoming less and less important for UK energy independence and security, and new licences for drilling in UK waters would make little difference,” non-profit initiative Energy and Climate Intelligence Unit (ECIU) said in a new analysis in early January.

While the UK government is betting on new oil and gas licences in the UK North Sea to reduce dependence on foreign hydrocarbon resources, ECIU’s analysis examined the impact of declining production from UK oil fields, with or without new licences, and found that oil from new licences sent to UK refineries would account for less than 1 percent of the fuels used in the UK in 2030.

“Oil from new fields such as Rosebank will be traded internationally – as the government has admitted, this oil is not earmarked for the UK and it won’t make any real difference to UK prices,” Dr Simon Cran-McGreehin, Head of Analysis at ECIU, said, commenting on the analysis.

According to Professor Gavin Bridge, Fellow of the Durham Energy Institute at Durham University,

“The notion that more drilling on the continental shelf boosts our energy security doesn’t stand up to scrutiny. Most of the oil is extracted by private or foreign state-owned companies over which the Government has little control.”

In company news, Harbour Energy, the largest oil and gas producer in the UK North Sea, announced at the end of December that it had reached an agreement with BASF and LetterOne, the shareholders of WintershallDeaAG, for the acquisition of substantially all of WintershallDea’s upstream assets for $11.2 billion, in a deal that would transform Harbour Energy’s scale and geographic diversification.  

The acquisition is expected to make Harbour one of the world’s largest and most geographically diverse independent oil and gas companies, adding material gas-weighted portfolios in Norway and Argentina and complementary growth projects in Mexico. Harbour will also benefit from an increased reserve life and improved margins with lower operating costs and greenhouse gas intensity.

The completion of the acquisition, subject to, amongst other things, regulatory, antitrust and foreign direct investment approvals, as well as Harbour shareholder approval, is expected to occur in Q4 2024.

"The addition of WintershallDea’s assets will increase our production to over 500 kboepd, extend our reserves life, and enhance our margins and cash flow, all supporting enhanced shareholder returns over the longer run,” Harbour CEO Linda Cook commented.  

“Importantly, the acquisition also advances our energy transition objectives by shifting our portfolio towards natural gas, lowering our GHG emissions intensity and expanding our CCS interests into new European markets.”  

Perenco UK announced in December a near-field discovery on Ravenspurn South with a new well, C06, proving gas in a previously undrilled fault block downdip of the currently producing RS field. This was the third well in Perenco UK’s Southern North Sea 2023 drilling campaign using the Valaris-247 rig, and follows the successful drilling of Ravenspurn North sidetracks, D15 and D16 producing all together 30 MMscf/d as of December 2023.

Repsolhas been fined £160,000 by the North Sea Transition Authority (NSTA) for flaring and venting more than 73 tonnes of gas—the highest fine the NSTA has issued to date for emitting greenhouse gases into the atmosphere without permission.

“Repsol has engaged with the NSTA to learn from its failings on this occasion and taken steps to ensure it does not happen again,” said Jane de Lozey, NSTA Director of Regulation.

Deltic Energy Plc said its JV finalised the positive well investment decision on Licence P2252 and approved the 2024 work programme and budget that allows for drilling the Pensacola appraisal well in late 2024.

Furthermore, Shell U.K. Ltd, the operator of Licence P2437, has informed Deltic that the geotechnical site investigation works on the preferred surface location of the Selene exploration well has been successfully completed and the vessel has been de-mobilised from site. The well remains on track to be drilled in Q3 2024.

Delticalso said in early January that it had been certified as a Carbon Neutral Business by Carbon Neutral Britain Ltd. Deltic’s Scope 1, Scope 2, and Scope 3 emissions were assessed for the 12-month period ending 31 October 2023 by Carbon Neutral Britain Ltd and 100 percent of corporate emissions have been offset through independently verified carbon offsetting projects. The carbon neutral certification will require renewal on an annual basis.

Petrofachas secured a three-year engineering, procurement, construction and commissioning (EPCC) framework agreement with TotalEnergies. Under the deal, Petrofac will have the opportunity to deliver brownfield EPCC solutions across TotalEnergies’ UK North Sea assets.

“In a mature basin like the UKCS - where enhanced recovery, field life extension and decarbonisation are key - this framework recognises our ability to combine our extensive engineering and construction expertise and offshore operations experience to support TotalEnergies,” said Nick Shorten, chief operating officer of Petrofac’s Asset Solutions business.

EnQuest PLC has reached an agreement with Viaro Energy’s subsidiary, RockRose UKCS 10 Ltd, to sell a 15-percent working interest in each of the Bressay field and the EnQuest Producer floating production, storage and offloading vessel (FPSO), both located in the UK North Sea.  

“We continue to progress the development of the wider Kraken area, including a Bressay gas tie-back solution to reduce Kraken emissions, as well as an early production solution project at Bressay,” Steve Bowyer, GM North Sea for EnQuest, said.

Dolphin Drilling AS has announced a Letter of Intent (LOI) for a 500-day drilling campaign for the semisubmersible rig Borgland Dolphinwith an undisclosed operator in the UK. The drilling campaign is planned to commence directly after the firm contract period with EnQuest, previously announced.

Subsea7 has been awardeda sizeable extension of an existing frame agreement by bp, for subsea construction, inspection, repair and maintenance services (IRM), across bp’s North Sea assets. Subsea7 defines sizeable as being between US$50 million and US$150 million.

This is the agreement’s latest extension since the original frame agreement began in 1998. Under the terms of this two-year extension to the end of 2025, Subsea7 will provide an IRM, survey and light construction vessel, complete with work class and observation class remotely operated underwater vehicles (ROV), capable of performing inspection, survey, intervention, subsea construction, and emergency response services.

Lerwick Harbour is set to be the main marine support hub for Equinor’s first phase of development of the Rosebank oil and gas field northwest of Shetland, the port authority said in January.

Contractor TechnipFMC is responsible for integrated engineering, procurement, installation and construction for Rosebank. The subsea production systems, umbilicals, risers and flowlines it manufactures will be delivered, stored and mobilised at the deep-water port.

“It is another significant opportunity for Lerwick and Shetland to continue serving the energy sector,” said Calum Grains, Lerwick Port Authority Chief Executive.

Wood has been awarded a major contract to deliver topside modifications supporting bp’s latest subsea tieback in the UK North Sea.Wood’s Operations business will deliver engineering, procurement, construction and commissioning (EPCC) services to enhance the central processing facility of bp’s Eastern Trough Area Project (ETAP) production hub in the central North Sea. Repurposing of existing equipment on ETAP will be a key focus under the two-year contract to enable the platform’s connection to Murlach, bp’s two production well subsea tieback development.

Valarishas announced several contract awards and extensions, including for jackups in the UK North Sea. Valaris was awarded a three-year contract extension with Harbour Energy in the UK North Sea for heavy duty harsh environment jackup VALARIS 120, a rig contract with TotalEnergies in the UK North Sea for heavy duty ultra-harsh environment jackup VALARIS Stavanger, two one-well priced options exercised by Shell in the UK North Sea for heavy duty harsh environment jackup VALARIS 121, and one-well contract with Ithaca Energy in the UK North Sea for heavy duty harsh environment jackup VALARIS 123.

Read the latest issue of the OGV Energy magazine HERE