Shell is to return to a pattern where North Sea staff will work two weeks offshore, then three weeks onshore.
The oil giant made the announcement to its workforce in Aberdeen on Tuesday following a review.
Most Shell staff had been working offshore for three weeks, then spending four weeks onshore, since the downturn in production about three years ago.
The Unite union said it had been campaigning against the "hated rota" on health and welfare grounds.
In April, an Offshore Contractors Association report said spending three weeks at a time offshore had left many oil workers feeling they were suffering substantial fatigue and were more likely to experience psychological distress .
Difficult to recover
The report suggested many had also found it more difficult to recover from the rota pattern.
Shell said it did not foresee job losses as a result of the changes.
The aim of the Shell review was to "continue to drive offshore productivity, to address some issues from offshore personnel and to manage our business".
Steve Phimister, Shell's vice president for upstream in the UK and Ireland, said: "What's important when you do these things is that you listen carefully.
"And what they (workers) said is the three-week-on working pattern was introducing fatigue and other issues in their family and personal lives that they were finding hard."
Due to decommissioning activity, Shell does not plan any changes to operations on the Brent Alpha or Brent Bravo platforms. However, Brent Charlie will move to the new rota.
The company said the changes were due to be implemented in the second quarter of 2019.
The move by Shell to return to a two weeks offshore rota comes as unions continued a dispute with Total over plans to introduce the three-week pattern .
Unite regional industrial officer John Boland said: "Unite has consistently highlighted the dangers of three weeks working offshore, and has been campaigning to get operators to move to better rotas for the welfare and health of our members.
"It is good to see that Shell have listened to Unite and the views of the wider workforce.
"This campaign is about our members' wellbeing and safety. We need to do everything possible to stop the use of this hated rota in the North Sea."
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The Permian is in desperate need of pipelines. That much is true. There is so much shale liquids sloshing underneath the Permian formation in Texas and New Mexico, that even though it has already upended global crude market and turned the USA into the world’s largest crude producer, there is still so much of it trapped inland, unable to make the 800km journey to the Gulf Coast that would take them to the big wider world.
The stakes are high. Even though the US is poised to reach some 12 mmb/d of crude oil production next year – more than half of that coming from shale oil formations – it could be producing a lot more. This has already caused the Brent-WTI spread to widen to a constant US$10/b since mid-2018 – when the Permian’s pipeline bottlenecks first became critical – from an average of US$4/b prior to that. It is even more dramatic in the Permian itself, where crude is selling at a US$10-16/b discount to Houston WTI, with trends pointing to the spread going as wide as US$20/b soon. Estimates suggest that a record 3,722 wells were drilled in the Permian this year but never opened because the oil could not be brought to market. This is part of the reason why the US active rig count hasn’t increased as much as would have been expected when crude prices were trending towards US$80/b – there’s no point in drilling if you can’t sell.
Assistance is on the way. Between now and 2020, estimates suggest that some 2.6 mmb/d of pipeline capacity across several projects will come onstream, with an additional 1 mmb/d in the planning stages. Add this to the existing 3.1 mmb/d of takeaway capacity (and 300,000 b/d of local refining) and Permian shale oil output currently dammed away by a wall of fixed capacity could double in size when freed to make it to market.
And more pipelines keep getting announced. In the last two weeks, Jupiter Energy Group announced a 90-day open season seeking binding commitments for a planned 1 mmb/d, 1050km long Jupiter Pipeline – which could connect the Permian to all three of Texas’ deepwater ports, Houston, Corpus Christi and Brownsville. Plains All American is launching its 500,000 b/d Sunrise Pipeline, connecting the Permian to Cushing, Oklahoma. Wolf Midstream has also launched an open season, seeking interest for its 120,000 b/d Red Wolf Crude Connector branch, connecting to its existing terminal and infrastructure in Colorado City.
Current estimates suggest that Permian output numbered around 3.5 mmb/d in October. At maximum capacity, that’s still about 100,000 b/d of shale oil trapped inland. As planned pipelines come online over the next two years, that trickle could turn into a flood. Consider this. Even at the current maxing out of Permian infrastructure, the US is already on the cusp on 12 mmb/d crude production. By 2021, it could go as high as 15 mmb/d – crude prices, permitting, of course.
As recently reported in the WSJ; “For years, the companies behind the U.S. oil-and-gas boom, including Noble Energy Inc. and Whiting Petroleum Corp. have promised shareholders they have thousands of prospective wells they can drill profitably even at $40 a barrel. Some have even said they can generate returns on investment of 30%. But most shale drillers haven’t made much, if any, money at those prices. From 2012 to 2017, the 30 biggest shale producers lost more than $50 billion. Last year, when oil prices averaged about $50 a barrel, the group as a whole was barely in the black, with profits of about $1.7 billion, or roughly 1.3% of revenue, according to FactSet.”
The immense growth experienced in the Permian has consequences for the entire oil supply chain, from refining balances – shale oil is more suitable for lighter ends like gasoline, but the world is heading for a gasoline glut and is more interested in cracking gasoil for the IMO’s strict marine fuels sulphur levels coming up in 2020 – to geopolitics, by diminishing OPEC’s power and particularly Saudi Arabia’s role as a swing producer. For now, the walls keeping a Permian flood in are still standing. In two years, they won’t, with new pipeline infrastructure in place. And so the oil world has two years to prepare for the coming tsunami, but only if crude prices stay on course.
Recent Announced Permian Pipeline Projects
Headline crude prices for the week beginning 3 December 2018 – Brent: US$61/b; WTI: US$52/b
Headlines of the week
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