As the majority of the UK’s oil and gas sector goes through a transitional period of super-major asset divestments, legacy field production declines and private equity funded asset acquisitions, the West of Shetland (WoS) area has managed to hold the attention of major exploration and production (E&P) players.
Over the past four years, production has increased accompanied by a growth in relevance for the biggest players still active in the United Kingdom Continental Shelf (UKCS).
To spur exploration activity from the 2018 lows, the UK opened up significant acreage in the 31st and 32nd Offshore Licensing Rounds. In an attempt to replicate the success seen in the 30th Offshore Licensing Round, which awarded a record number of WoS acreage, substantial datasets were made available across the areas on offer. The expansive UK acreage available coupled with the large yet-to-find volumes estimated in the WoS suggest significant resource opportunities do remain in the basin.
Despite the US-based E&P majors, such as Chevron and ConocoPhillips largely divesting out of the UK’s E&P sector of late, their European peers have not followed suit. Of the highly successful 30th Offshore Licensing Round held in 2017, approximately 75% of the licensed WoS blocks had European major participation. Also, European majors have stakes in 80% of the planned and announced projects in the area compared to approximately 40% in the North Sea.
BP Plc (BP) and Royal Dutch Shell (Shell) combined accounted for over half of WoS total production in 2018, with Total SA alone accounting for approximately half of the total gas production currently being produced in the basin. Both BP and Shell have seen their North Sea production losing relevance with the WoS production becoming ever more significant in their UK production volumes. By 2020, the WoS is set to overtake the North Sea as the major producing basin within both BP and Shell’s UK portfolios.
BP and Shell’s West of Shetland and North Sea share of UK production
Source: Upstream Analytics, GlobalData Oil & Gas © GlobalData