Things that Go Bump in the Night: The North Sea Disruption Uncovered

North Sea Disruption Uncovered
Blog November 26, 2018

Around 3 a.m. local time (GMT +1) on November 8, an oil tanker and a Norwegian navy vessel collided just outside the Sture oil terminal in Western Norway. The terminal was shut down for safety concerns, leaving market participants to believe that as much as 25 percent of Norway’s oil production could be shut-in. Given North Sea production is crucial to setting the Brent global oil benchmark, the magnitude and duration of lost production were important questions to answer.

When production or port facilities experience problems on the other side of the world, analysts have historically made back of the envelope calculations to estimate how much production is affected. These ballpark figures often come from looking up the capacity of the terminal or contacting “anonymous” sources in the country.

In this instance, simply adding up the production of each field that delivers to the Sture terminal resulted in an estimate of ~350 thousand barrels per day (“kbpd”) of oil production that was temporarily shut-in. Genscape, however, uses sophisticated signals intelligence to delve much deeper than back of an envelope calculation.  During this disruption, we used our newly developed, near real-time oil production monitoring system for the entire North Sea to detect a much smaller production impact than the market originally thought.

Norway Total Liquids Production
Figure 1: Daily Oil Production (dark line) highlights several events in real time. Our Global Oil Supply Report forecasts liquid production (blue line) and project start ups. Click to enlarge

During the last year, Genscape developed the High-Frequency Oil Production Monitor (the "Monitor") to shed light on these impactful events around the world without relying on rough estimates or anonymous sources. The Monitor combines advanced signals intelligence with field production data to determine current, daily production estimates. Our signals intelligence sources include, but are not limited to satellite, Genscape Voyage Events, and gas nomination data.

During this disruption in the North Sea on November 8, the Monitor detected that Norwegian total liquids production (oil, condensate, and NGLs) declined by ~ 168 kbpd during the morning and that a recovery was already underway by lunchtime on the East Coast. This event was actually just a minor hiccup in terms of production and much less significant than a rough estimate indicated. Indeed, the terminal shut down was confirmed to be short-lived, and the facility came back online by the evening of November 8.

We currently cover 26 million barrels per day (“mmbpd”) of total liquids production around the world, including Iraq, Iran, Libya, Venezuela, the US and more. The Monitor’s coverage is expanding over the next several months to include the North Sea, Mexico, and more Middle Eastern nations. We deliver daily production data to our clients via an API link.

The foundation of the Monitor is Genscape’s Global Oil Supply Report. This comprehensive picture of global production covers 2,500 + fields and produces monthly production estimates by country broken out by liquid type (oil, condensate, NGLs, and other petroleum liquids).

North Sea Oil Production Growth Projections
Figure 2: Selected Norway and UK oil production growth projects through 2022. Caution: The start date and production volumes are subject to change as each project develops. Click to enlarge

The Global Oil Supply Report dives deep into regional specifics, providing monthly production numbers and breakouts of growth projects. Major growth oil projects for the North Sea are highlighted above. Led by Equinor’s Johan Sverdrup, the North Sea is expected to expand by 51 new projects through 2022. Several new fields began in 2018, including Ivar Aasen (peak flow of 57 kbpd in February), Maria (50 kbpd), and Gina Krog (50 kbpd). In the UK, the Catcher field begins new production, tying in Varadero (20 kbpd) and Burgman (20 kbpd) fields, bringing Catcher Area Field Development to a potential 60 kbpd by mid-2019.

With our Global Oil Supply Report, gain a unique view of the rapidly changing oil-producing countries across the world, click here to request a trial.

Building on the global report’s foundation, gain access to accurate production level tracking and detect inflection points earlier by assessing previous weeks and months faster than other sources, with our High Frequency Oil Production Monitor.

Follow Devin Geoghegan on Twitter at @GlobalOilSD