Oil companies are now preferring to boost production from existing fields rather than drill new wells, a play at cutting costs that holds significant implications for cash-strapped countries like Nigeria.
New research by Rystad Energy, a global energy research firm, found that operators are more likely to undertake interventions into mature assets that have been producing for more than five years, with relatively high production rates, which are starting to show signs of decline.
“As oil demand picks up in the second half of this year, operators will look to ramp up production from existing fields, and well interventions will be a vital piece of the puzzle,” said Jenny Feng, supply chain analyst at Rystad Energy.
The global trend has seen oil and gas companies around the world splurge an estimated $58 billion on well intervention efforts – a way to extract additional resources from an existing well instead of drilling a new one.
As oil and gas production companies are increasingly searching for efficient and cost-effective methods to increase their output, the intervention rate – how many oil and gas wells go through the intervention process – is forecast to reach 17 percent in 2027. This would total about 260,000 wells globally.
Spending on interventions is projected to jump by almost 20 percent this year and total $58 billion, Rystad Energy’s modelling shows. This is said to be the start of a surge in the coming years as the focus on efficiency intensifies.
According to Rystad, more than $11 billion of the total expenditure will be directed to the wireline and perforating segment, while together, intervention units and oilfield chemicals sectors will represent 35 percent.
In addition, the sum of the investments in coiled tubing, water management, and intervention tools is expected to close in 2023, surpassing $20 billion.
Onshore interventions in Asia, South America, and Africa will lead the 9 percent growth in activities related to intervention during 2024, a year expected to be significant for the well intervention market. North America is projected to account for 64 percent of the total oil and gas wells ready for intervention in 2027, whereas Asia and South America will reach their maximum in 2026, with respectively 41,413 and 9,703 wells.
Analysts forecast that as oil demand picks up in the second half of this year, operators will look to ramp up production from existing fields, and well interventions will be a vital piece of the puzzle. As a quick, efficient, and cost-effective method of maximising existing resources, interventions are going to be a hot topic in the years to come.
Africa’s biggest oil producer has seen oil companies leaving onshore fields mostly due to sabotage, insecurity, and communal agitations. Deepwater fields are becoming the most attractive option and they are lobbying for better fiscal terms.
Read slso: TotalEnergies to drill oil well in next one year, completes fresh well projects
Elohor Aiboni, managing director of Nigeria’s leading deep-water oil and gas company, Shell Nigeria Exploration and Production Company, at a recent conference in Abuja called for good fiscal terms for onshore oil projects as well as for positive fiscal terms for gas projects that are not associated with oil projects.
“Favourable fiscal terms will also boost investors’ confidence, encouraging them to implement projects in the industry. There are factors that will drive oil and gas projects and the first is around the fiscals which is very critical; so there must be right and clear fiscal terms to support the execution of projects,” she said.
Independents and indigenous oil producers now represent Nigeria’s best hope for reviving oilfields that have been in production for years but whose output are declining. But their efforts can only bear results if the various divestment deals are allowed to proceed.
