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Industry analysts Rystad Energy recently released their latest forecasts for the sanctioning of global oil & gas projects, which predicted a significant rise in onshore and offshore projects to pre-pandemic levels by 2022.

(Image via Dean Brierley / Unsplash)

According to the firm, global project sanctioning is expected to have fallen to just $53 billion in 2020 ($34 billion in offshore projects and $19 billion in onshore projects) as a result of the Covid-19 pandemic and the fall in oil prices. This is down from $101 billion in offshore sanctions and $89 billion in onshore sanctions in 2019. 

However, by 2022 projects are expected to reach pre-pandemic levels once again, with offshore projects forecast to reach $95 billion, oustripped by onshore project commitments at a total of $100 billion - the highest level since 2014. 

The news is certainly positive for the industry, particularly with it coming at a time when most majors are looking at alternative sector investments. It’s also significantly higher than Rystad’s previous report, with the new forecasts taking into account several onshore and offshore development commitments. 

Rystad listed six global projects as the main contributors to their new figures, including offshore and onshore developments as widespread as China, USA, Russia, Norway, Guyana and Brazil. So we thought we’d take a closer look at these particular projects that have increased the industry’s potential post-pandemic recovery and are likely to become major sources of offshore and onshore oil and gas jobs over the next few years. 

These are the six projects:

(Image via Petrobras)

Mero-3 FPSO


Approximately 180km off the coast of Rio de Janeiro is the Mero Oil & Gas field, part of the Libra block in the pre-salt area of the Santos basin. This field has been in pre-production since 2017 with the 50,000 barrel-per-day Pioneiro de Libra FPSO. 

Operators Petrobras have signalled their intention to launch four FPSOs in the field, which is expected to contain 3.3 billion barrels of recoverable oil reserves. Two had already been signed off, but it wasn’t until August that an investment decision was made by Petrobras, Total and the other partners for the launch of the Mero 3 FPSO. Like Mero 1 (due for startup in 2021) and Mero 2 (2023), Mero 3 will have a liquid treatment capacity of 180,000 barrels per day. 

Mero 3 is expected to cost $2.5 billion to first oil, which is expected in 2024. MISC has a letter of intent in place with Petrobras for the charter and will sub-contract the construction work of the hull and topsides to China Merchants Heavy Industry (CMHI). Siemens will deliver the power generation modules while Aker Solutions will perform front-end engineering and design (FEED) and engineering works on the topsides.

(Image via SBM Offshore)

Payara FPSO


The Payara oil field is being operated by ExxonMobil who hope to startup in 2024. Located in the prosperous Stabroek block off the coast of Guyana, Payara is estimated to hold 500 million barrels of recoverable reserves, with the potential to produce approximately 450,000 barrels per day. 

ExxonMobil intend to launch an FPSO unit with oil and gas processing capacities of 220,000 b/d and 400MMcf/d, from 35-45 production and injection wells. The company is still to commit to an FID as it awaits government approval - which was delayed due to the political upheaval in the country. The inauguration of new President Irfaan Ali last month was seen as a positive sign for the project’s ultimate approval, after months of political uncertainty. The new government has so far selected a Canadian specialist, Alison Redford, to review ExxonMobil’s plans and provide an expert opinion. 

Exxon remain hopeful that government approval will be made in September and have already signed SBM Offshore on an advanced commitment on the FPSO. SBM is understood to have started procurement activities in collaboration with the Chinese and Singaporean yards, with Shanghai Waigaoqiao Shipbuilding (SWS) responsible for supplying the hull and Dyna-Mac and Keppel taking the topsides. 

Rystad have said they “expect [an FID] to happen soon” and have listed the potential $3.6 billion in commitments in their industry forecasts. 

(Image via Shell)

Whale oil field


Shell have recently announced plans to overhaul their spending allocation to focus more on renewable energy sources and cut costs in their offshore oil & gas projects. However, they have signalled that they will continue to focus on operations in the Gulf of Mexico and before the oil price crash had already awarded a major contract to Sembcorp Marine for construction of the topsides and hull of a Floating Production Unit (FPU) for the Whale project in the US waters of the Gulf. 

The Whale deepwater discovery was made in January 2018 when an exploration well in the Alaminos Canyon Block 772 encountered more than 427 of oil bearing pay. In November 2019 Sembcorp was awarded an EPC contract for the construction and integration of a topside and four-column semi-submersible floating hull of an FPU with a total weight of 25,000 tonnes. It will be designed to process 100,000 b/d of oil, 230 MMcf/d of produced gas and 10,000 b/d of produced water. 

Deep Down Inc were also commissioned in February 2020 for the design, engineering and manufacture of a riser isolation valve control system and other subsea production equipment to be installed on the FPU.

Despite its inclusion in Rystad’s forecasts, this project is a larger unknown than some of the others on this list. Shell have already delayed an FID until 2021 and it remains to be seen how the results of their current spending review will actually affect projects like this. Ongoing concerns about maintaining social distancing and quarantines in vital areas for this project are also creating uncertainty. However, the company has signalled that it is still committed to the project, with Chevron also taking a 40% ownership and construction of the FPU is currently underway in Singapore. Plans at the time of writing suggest that the project is still scheduled to come online in 2024. 

(Image via Gazprom)

Chayandinskoye oil rim


The Chayandinskoye field, located in Sakha Republic of Russia is expected to contain 49.4 Tcf of gas reserves and 562.2 MMboe of oil and condensate. A major development was started up in 2019, at a cost of $13.6 billion and now the operator Gazprom Neft has commissioned an additional “fishbone” well at an oil rim deposit to increase coverage and oil recovery factor. The initial flow rate through the fishbone well is more than 380 tonnes per day - double the level achieved through the standard horizontal wells previously used in the field. 

A total of 44 fishbone wells are to be drilled in the deposit, getting the most of the “hard to recover” resources. Development activities started this year, with a major expansion of the existing central processing facility at the main field expected to begin construction soon. 

According to Rystad, the onshore development is estimated to cost around $1.3 billion and the field is expected to come on line by 2022. 

(Image via Vår Energi)

Balder Future


Back in 1965 production license PL 001 became the very first license on the Norwegian Continental Shelf and included the Balder Field. Now, Vår Energi is investing heavily to extend the life of the field to 2045. 

This investment includes the NOK 19.6 billion Balder Future project which involves the drilling of 13 new production wells and one water injection well on the field, with the aim to extract 136 million barrels of oil equivalent. The Jotun FPSO, which has been producing since 1999, will also be upgraded, though the initial plans to take it ashore this year have been somewhat delayed. 

The Balder Future project is expected to create nearly 30,000 full-time man-years in an operating period lasting up to 2045, with a peak of 4,500 during the first two years of upgrades and installations. 

Though there have been delays to the project, Vår Energi and Mime Petroleum submitted a revised PDO in December, which was recently approved by the Norwegian Ministry of Petroleum and Energy. Worley have been commissioned for the upgrade of the FPSO while Baker Hughes and Ocean Installer will supply the subsea facilities. 

(Image via CNOOC)

Luda 6-2


Offshore China, in the Bohai Bay, is the Luda 6-2 oil field in depths of approximately 30 metres. In 2019 China National Offshore Oil Company (CNOOC) announced a development plan for the field, which would involve construction of a new eight-legged central processing platform and three pipelines totalling 32.6km. A 15.5km oil export line, a 6” 15.5km gas export line and a 14” 1.6km water injection pipeline would also be installed, connecting to existing infrastructure which would also need to be modified. 

China Offshore Oil Engineering Co (COOEC) recently confirmed the start of development activities on the field, at an estimated cost of $170 million in greenfield commitments. It’s thought that production is likely to start in early 2022. 

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