Development lead times

How long does it take to develop a new discovery to first production? The answer will of course vary greatly and depend on a wide range of factors, from the size of the accumulation, to the maturity of the basin and the presence or lack of existing infrastructure. But in many cases the time taken will probably be longer than originally anticipated.
The recently published Oil & Gas UK economic report contributes some interesting statistics on this subject from a UK perspective.In the North Sea, the current average is 17 years (for those fields entering production since 2005), with all developments during this time taking more than 10 years. This is a lengthy payback time for both operators and investors.

For a mature basin such as the North Sea, these numbers are somewhat misleading since discoveries are often considered uncommercial when originally drilled but can become
more attractive later due to the application of new technology, access to new infrastructure or an improved economic environment. For example, the Kraken heavy oil field was originally discovered in 1995, but it wasn’t until Nautical Petroleum drilled an appraisal well in 2007 that a development looked commercial. Current operator EnQuest expects first oil from Kraken in 2017, though it is worth noting that this will be five years later than the 2012 onstream date that was assumed after the success of the first appraisal well.

The record for a UKCS oil development is the 85 days achieved by TAQA in tying back its 2012 Cormorant East discovery to the North Cormorant platform. This is an impressive achievement, but ultimately only possible because TAQA was operator of both the discovery and the host facility. EnQuest’s Scolty/Crathes were discovered in 2007 and 2011 respectively and are due onstream by the end of 2016. The field will be tied back to the Kittiwake platform, facilitated by EnQuest acquiring 50% and becoming operator of the Greater Kittiwake Area in 2014. Without this level of control, tie back developments tend to take longer. Serica Energy discovered the gas condensate Columbus field in 2006, but has been unable to agree commercial terms with the operator of the Lomond Platform less than 8km away.

Even those accumulations that look attractive straight away as stand alone developments can take many years to come onstream. Chevron’s 240mmboe Rosebank, one of the largest undeveloped fields in the region, was expected to be onstream within 7 years of its discovery in 2004, but it has yet to be sanctioned, partly because the project sits in the under developed West of Shetland region and requires a new gas pipeline.

Successful stand alone projects tend to take at least six or seven years from discovery to first oil, with Buzzard, Golden Eagle, Foinaven and Huntington all in this timeframe and to be joined by EnQuest’s Catcher if it comes onstream as planned in 2017. More technically challenging fields are likely to take longer. Maersk’s HPHT gas condensate Culzean field is due onstream in 2019, eleven years after discovery. The Mariner heavy oil field is also due onstream eleven years after current operator Statoil took over the asset in 2007 (although the field was discovered in 1981).

In less mature Norway the average lead time for an individual discovery is still 11 years and up to 15 years is not uncommon.

Offshore West Africa, the development timelines are shorter with the majority taking between 7 to 10 years, but can range from 3 to 16 years.

When a discovery is made, the temptation is to believe that this is the project that will be developed within the most optimistic historical timeframe. It would be more prudent to assume that it will not.