Oil Surge Loosens the Leash on Long-Delayed Drilling PlansBy
Investment approvals in 2017 more than doubled 2015-2016 count
There are still 104 big projects awating approval, Rystad says
Rising oil prices are helping shrink a backlog of delayed drilling projects that reached a peak of 111 in January 2017.
From production vessels tapping Brazil’s deep-water reserves to pipes connecting rigs to underwater wells in China, the number of ventures that received final financial approval after a delay grew to 18 last year, according to a report by consultant Rystad Energy.
"Every dollar uptick in oil prices has increased profitability for those (projects) to move ahead," said Readul Islam, a research analyst at consultant Rystad Energy. "As oil prices improve, it’s only a positive."
Among big oil projects that received the go-ahead last year, Brazil’s Petroleo Brasileiro SA, France’s Total SA and their partners approved the next phase of development of the multibillion-barrel Libra field off Rio de Janeiro’s coast. The plan includes adding a floating production, storage and offloading ship, or FPSO, by 2021 and another by 2022.
BP Plc also saw a delayed project named MadDog 2 move forward in 2017. The oil field is estimated to cost $9 billion and will be in the U.S. Gulf of Mexico.
“The industry has put in a lot of spadework to advance these delayed projects,” Readul Islam, a research analyst at Rystad, said in the report. “With over 100 projects still in our tracker as we enter 2018, the hard work must continue to maintain 2017’s momentum.”
— With assistance by Sabrina Valle, and Peter Millard