While industry insiders raised some eyebrows when Woodside CEO Peter Coleman talks up the development plan for Browse as "a pipeline shorter than Ichthys and a couple of FPSOs", it will still be a massive undertaking.
Woodside is gaining more line of sight on Browse, likely Western Australia's next greenfields development, an offshore development benefiting from existing onshore infrastructure at the North West Shelf.
As the oil price downturn enters its third year, exploration and production companies are witnessing significant cost savings while service companies continue to struggle with lower margins.
Norwegian consultancy Rystad noted last week that while there were more than 650 greenfield projects both on and offshore sanctioned in 2012, that number dropped by a third and bottomed last year with less than 200 moving to final investment decision.
While the number of operators sanctioning projects also dropping by 50% was unsurprising, more interesting was the fact that the top 10 operators sanctioning projects increased their combined share of projects from 20% to 30%.
That translates to fewer E&P companies controlling a larger flow of service contracts up for award.
The pricing power revealed in the cost reductions seen from the highs of 2012 to 2017 are reflected in Rystad's analysis of the total greenfield cost to develop a field, normalised by reserves developed.
Global projects that were sanctioned in 2012-2014 had an average greenfield cost of $US11 per barrel of oil equivalent for deepwater, $7/boe for shelf developments and as low as $4/boe for onshore developments.
Increasing pricing power coupled with downsizing development scope, E&P companies were able to take greenfield costs down by 42%, 31% and 26% for deepwater, shelf and onshore projects respectively, Rystad said.
"Engineering companies, platform fabricators, equipment manufacturers and rig operators continue to feel the effects of downward pricing pressure," the firm said.
"Deepwater projects exhibited significantly larger cost cuts due to higher margins and greater potential for downsizing without a significant reduction to the amount of reserves developed."
Another consideration is how the lifting costs have improved during the same period.
Brownfield expenditures divided by barrels produced has declined significantly, as operators also put pressure on providers of supply vessels, logistical, maintenance and modification services.
In 2014, lifting costs were almost $17/boe for deepwater, $11/boe for shelf and $4/boe for onshore projects.
In 2017, these costs are about 30% lower for deepwater and 20% lower for shelf and onshore fields.
Offshore projects have the biggest potential for lower lifting costs. However, all segments of the market are experiencing pressure on unit prices.
