Oil and gas contractors in the UK will be happy to learn that Apache Corporation, the Texas-based oil and gas exploration and production company, has announced that in 2016 it will be focusing more on its North Sea operations.
The company said that it will be reducing its capital expenditure this year by more than half, but the cutbacks will affect the North America onshore projects. In 2016, Apache will be assigning between $1.4 billion and $1.8 billion to its capital expenditure. Compared to the capital spending the company incurred in 2015, the current year’s CapEx is less than half. In 2015, it spent $3.6 billion.
Apache will divide the capital expenditure equally between maintenance, development and exploration and North Sea operations will receive 30% of the CapEx.
This decision is contrary to the existing opinions that the North Sea has reached maturity and hence is too expensive to operate and maintain, making the oil and gas basin an unattractive investment.
Apache’s North Sea projects produce oil and gas at less than the average cost for the region. By the end of 2015, it cost the company an average of $16 per barrel. However, this figure is more than what it spends at its North American and Egyptian assets.
In October last year, Apache announced it had found new reservoirs in the North Sea., two of which are located just east of Orkney, in the Beryl region, while the other is near the Forties field, east of Fraserburgh. It is estimated that the three finds have a reserve of 74 to 129 million barrels of oil.
Apache has drilled 23 wells in the UK North Sea, with a success rate of 83%. In the last quarter of 2015, all its North Sea operations produced an average of 72,000 barrels of oil per day.