Crikey, we are half way through May, that's half way through the second quarter of 2016, and so far this year there hasn't been a single new field development plan approved by the OGA. In fact there hasn't been an FDP approved since Scolty & Crathes in October last year, over six months ago.
Don't blame the OGA, they can't approve what hasn't been submitted. It is all of us, in the oil and gas industry, who haven't managed to get a project ready enough to make that formal FDP submission. That's not to say that there aren't projects worth doing and technically ready to be submitted, but the people holding the purse strings are putting the brakes on. The bankers, the boards, the brokers, the bond holders or any of the other bleeders that actually decide when and where money can be made available, that's where the problem lies.
And of course the reason the purse strings are being held so tightly is the oil price. There isn't an oil company around that was built for oil prices in the $40's, let alone a spell in the $30's. When the oil price was $110/bbl, a $60/bbl downside test seemed pretty extreme. Now $60/bbl is just wishful thinking. So with virtually every company desperately trying to shore up their balance sheet, or prioritising dividends now, over prosperity in the future, no one, but no one, is splashing the cash on a brand new field development.
Even last year things weren't so bad. We had come off a surge of new projects with a huge boost to capital spending in the UKCS. Time was £1 or £2 billion worth of projects were approved every year, but when the oil price started to climb more and more projects looked profitable and got over the hurdles. I have taken liberties with the OGA chart that shows the capital committed in the various FDP's approved since 2001, it is rotated 90º and I have added most of the names of the fields approved in each of the years.
From 2010 to 2015 £7 to £8 billion a year was being committed to new projects. Even in 2015 more than £4 billion worth of field development plans were approved. But now, it is nothing, nada, zilch, not a single new FDP for the last six months.
So, which field is going to prove that the North Sea is not a wasteland.
Truth is I don't know, but I am guessing my audience does. So stick your neck out, vote on the poll just here and let us know which project you think will get over the line first. I'm bound to have missed the front runner, so if that is the case, email me or tweet at me and I'll add in your favourite.