In today’s oil price environment, not many companies are growing production, sanctioning multiple mega projects and looking for material acquisition opportunities. It’s refreshing to report that we are.
This edition is filled with stories that illustrate delivery of the strategy we have all been busy executing.
Firstly, on safety, we can be encouraged that the long term trend is for safer operations. The Lost Time Injury Frequency (LTIF) – per million working hours has been reduced by 66% since 2009. This is an achievement and deserves recognition. However, we cannot afford to be complacent and I urge everyone to live with constant care in mind and I hope that we can soon tell a similar success story about process safety.
Secondly, we are living up to our commitment to operate our current portfolio more efficiently, and thereby increase production at lower overall cost. At the annual Capital Markets Day in September I was able to present an impressive 33% operating expediture (opex) per barrel reduction from July 2014 to July 2015 - a commendable statistic - and one that has been delivered against the backdrop of increasing production. Further incremental improvements will be substantially more challenging but it is a trend we should strive to continue.
Thank you to everyone for making that a timely success story to tell. In the global race to be an operator or partner of choice, operating safely, efficiently, and cost-consciously are essential elements to position the company for success.
Another crucial pillar upon which our future is built is the ability to progress and mature projects, and we passed two huge milestones in August.
It was good to be in Aberdeen for the sanctioning of Culzean too, where I got to spend a little time with the project team behind Culzean, our partners in the development, and the UK Chancellor of the Exchequer for the official go-ahead of our first high pressure, high temperature (HPHT) gas project. The development of the largest new field discovered in the UK North Sea for a decade is exciting on a number of fronts. It represents a USD 4.5 billion total investment and will deliver 60,000-90,000 boepd production, with Maersk Oil’s share around half of that.
The final unitisation decision from the Norwegian authorities triggered the sanctioning of the mega project Johan Sverdrup. At plateau production this will produce around 550,000 barrels of oil per day – and the green-light for Phase 1 is a major step towards that.
These are multi-billion dollar greenfield projects in a mature basin. We see the potential for a lot more economic recovery across the Danish, UK and Norwegian sectors of the North Sea, and the experience we are gaining in operating in an efficient, cost conscious way, with the added experience of HPHT under our belt, positions us well to make the most of future opportunities.
However, I, and I know I speak for my colleagues in the leadership team here, am fully aware it isn’t all one way traffic right now and we do understand that this is a time of uncertainty. I encourage you to think of the positive direction of travel we have embarked on.
The Cost Transformation driven-actions are being implemented to shape us as a company that is equipped for growth. The oil and gas industry is undergoing significant change as a result of 12 months of low and volatile oil prices – we can’t be immune to this, and the robust response we have mounted has regrettably had headcount implications.
In spite of the market conditions we have been able to grow production and deliver on the areas set out above, but also, position ourselves for the growth opportunities up for grabs today.
Successful implementation of the Cost Transformation programme gives us the right to grow. Geared up for growth, this is an exciting time for Maersk Oil.