Market Report: Well Intervention

A new study by Petrologica.com and Axiom EMI shows the UK offers the best prospects for well intervention, plugging and abandonment over the next ten years. The joint report, “Well Intervention Market – Available Technology and Prospective Market,” provides a ten-year market outlook for the UK, Norway, and US Gulf of Mexico, as well as a review of the state of the art in well fatigue mitigation.

COVID-related labor shortages reduced well interventions by c. 50% in 2020 against 2017 levels in the UK. But with oil prices at a high point in the cycle, extending the life of existing assets is becoming increasingly cost-effective. “Activity is likely to see a sharp uptick from 2023 onward and see 7% CAGR 2021-2030, with similar trends in both Norway and the US Gulf of Mexico”, according to lead analyst for Petrologica, Leonardo Martini. “Both the latter markets have relatively high barriers to entry – Norway through Equinor’s dominance, and the US through its well-diversified Jones Act-compliant fleet.”

The well intervention space has been dominated by light intervention vessels over the past decade, but reconditioned semisubmersible rigs will regain market share in the future, according to the authors. “New developments in fatigue mitigation, including load relief, BOP tethering systems, and more, are increasingly making a heavier rig-based solution feasible,” says James Hall, lead analyst for Axiom EMI on the project. Reconditioned third and fourth-generation MODUs are able to function as a “one-stop shop,” covering both riser-less and riser-based interventions and lowering deployment time. Some operators have developed specialized rigs, such as Island’s Innovator for well intervention and Well-Safe’s Guardian for plugging and abandonment work. Utilizing the latest technology shorts well intervention lead time, reduces costs, and minimizes environmental risks.

The report also shows that P&A activity will rise in the UK, Norway, and the US Gulf of Mexico. There are considerable inventories of subsea wells in all countries: over 1600 in US Gulf of Mexico, over 1900 offshore UK, and over 2000 on the Norwegian continental shelf. Of these wells, just a quarter in the UK, a third in Norway, and less than 50% in the US GoM are operational, leaving the vast majority as candidates for permanent abandonment if not re-entered in the future.

In the UK, current tax relief of 35% on decommissioning costs has seen subsea well P&A activity more than double year-on-year in 2022, with 55 wells expected to be decommissioned. Activity is likely to remain at or above this level for the next ten years.

Founded in 2003, Petrologica is a full-service energy consultancy that produces timely analysis on all things oil and gas. Axiom is a market intelligence start-up focused on the global offshore energy markets. For more information on both companies, and to sign up for a free weekly oil market briefing, visit petrologica.com and axiomemi.com