The North Sea region spreading between the United Kingdom, Norway, Denmark and The Netherlands will see 63 fields being brought to production between 2018 and 2023, of which 34 will be subsea tie-backs.

The Gulf of Mexico (GoM) region shows a higher ratio of subsea tie-backs to total projects than the North Sea. There, a total of 30 projects are expected to come online until 2023, of which 23 are subsea tie-backs. The North Sea however provides a higher average Internal Rate of Return (IRR) (45%) for subsea developments, compared to the average in the Gulf of Mexico (32%) for the same development type. Of the total estimated capital spending of $69bn for planned and announced projects in the North Sea, $14bn will be spent on subsea tie-back developments.

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Tie-back developments have become the ideal solution for operators looking to maintain the short to medium-term production outlook, providing a quicker return-to-investment when compared to larger stand-alone developments. Average payback time is less than six years, the shortest time for all development types.

North Sea planned and announced fields starting up until 2023

Source: GlobalData Oil and Gas. © GlobalData. Figure 1 excludes daily production from Johan Sverdrup field (fixed platform – forecast 667,000 boed in 2023)

By 2023, planned and announced fields in the North Sea are expected to contribute with 1.6 million barrels of oil equivalent per day (mmboed), of which 0.5 mmboed are expected to come from subsea tie-back projects. The subsea tie-back development option shows an average development net present value per barrel of oil equivalent (NPV/boe) of nearly $6 and an average IRR of 45%.

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The rise of the number of subsea tie-backs projects in the North Sea is perhaps also due to the few large discoveries been made in the region, as is also the trend in the US GoM. These types of developments become an attractive solution for operators looking to fill the mid-term production outlook gaps with lower capital risks.