17% rise in Brent crude oil price in 2017 helps N. Sea get 2018 going with new first-oil starts

BP is working towards Summer 2018 first-oil from Claire Ridge
BP is working towards Summer 2018 first-oil from Clair Ridge

The new year has got off to a good start in the North Sea with Edinburgh-registered Premier Oil pumping its first-oil from its Catcher area just before Christmas.

Initial stabilised production from the Catcher area field is expected to settle at around 10,000-barrels a day before being ramped up to 60,000 bpd by Summer 2018 when once all 19 wells in the area are producing.

The Catcher Area cost $1.6 billion to bring on-stream – which is 29% below the budget when the investment was first approved.

Chief Executive Tony Durrant said the project demonstrated Premier’s ‘continuing commitment’ to invest in the North Sea.

Also in Summer 2018, BP’s Clair Ridge field – west of Shetland – is due to start production.

And Statoil – the Norwegian state-owned explorer –  recently announced that it had discovered a new oil find in the Verbier field in the Scottish North Sea.

While N. Sea crude oil prices remain permanently exposed to global geo-political volatility, the price of Brent crude rose by 17% during 2017 – due in part because of modest cuts in production by the Saudi-led OPEC oil cartel.

While OPEC, the cartel of oil exporters, last month agreed another phase of production cutbacks in order to put a floor under the price, the US fracking industry can step in with a quick hit of new, fracked production, thus keeping a ceiling on crude oil prices. Accordingly, experienced oil analysts expect crude oil prices to continue a slow and gentle rise over 2018.

Other major geo-political factors likely to affect crude oil prices are the possibility of domestic unrest in Middle East countries in clashes between modernisers and religious-led social conservatives, as well as the progress of social reform in Saudi Arabia where the ruling royal clan faces tensions between its need to reduce the country’s overwhelming economic reliance on oil before battery powered vehicles and renewable energy tip the automotive fuel market away from its hydrocarbon dominance.

In thin trading since the New Year, crude oil has bubbled around the $67-barrel mark, while Germany’s Commerzbank has predicted Brent will see out 2018 at $60 a barrel.

4 Jan 2018

 

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