UK – Smaller Companies Are Entering The Race In North Sea

A new trend is starting to emerge from Europe as bigger oil producers are focusing on other regions around the world another era of small producers is leading the race in the UK North Sea.

The latest offshore licensing in the North Sea has increase, new players are bidding for blocks. Total is putting all their North Sea assets for sale, opening the door for smaller companies to dominate the North Sea!

With a non-founded fear of decline in production in recent years, the North Sea is one of the biggest and most important offshore oil and gas regions in the world. Streamlining their operations after the oil price crashes of 2008 and 2014, companies have taking advantage of new emerging technologies to cut cost at ageing fields.

Last May, the UK Oil and Gas Authority (OGA) granted 123 exploration licenses as part of the 30th Offshore Licensing Awards. The awards cover 229 blocks or part-blocks spanning an area of 26,659km². 61 companies have been awarded the licenses.

Like Norway, larger oil and gas companies are moving away letting smaller exploration and production (E&P) companies entering the game.

What is the advantage to have smaller companies taking over?

Six Big companies like Total and Chevron are selling some of their assets in the UK North Sea. Which is a great move for smaller E&P companies like Neptune Energy and Tangram Energy. Those companies are resilient and can adapt to the environment.

There is still an estimated 1.5 billion barrels of oil resources in undeveloped discoveries on the UK Continental shelf (UKCS). The challenges are that some of them are too small or too difficult to access. New technologies and best practices have evolved providing new opportunities for smaller companies.

While bigger companies decision-making process can be cumbersome to act quickly smaller companies have leaner decision-making process that makes them act quickly to develop and explore, adapting to the ever-changing business and investment environment.

Many of those smaller companies have specific production techniques, taking advantage of new technologies.

With regulatory changes in several areas are facilitating the shift, making it easier for smaller companies to be awarded blocks.

Since 2014, the UKCS has increased production by 16%. It is forecasted to maintain the current production levels until 2020.