Conventional petroleum provinces in the North Sea range from mature to very mature, and thus it seems that future will be defined in terms of “marginal discoveries” - the OGA estimates that there are already ~350 unsanctioned discoveries in the UKCS – and possibly shale oil/gas, with the intriguing possibility that these two types of opportunity could work in the same place and thus support each other, offshore.
At a recent Finding Petroleum event:
One company, Azinor Catalyst, described building a material portfolio of high value UK Continental Shelf (UKCS) exploration assets, through a combination of Licencing Rounds and targeted acquisitions. Although they do not necessarily see the volumes that they will hold as small or “marginal”, they are very likely to need access to existing infrastructure to exploit them.
Kimmeridge Energy and Advisian described significant next step that they had achieved by undertaking a ‘surgical' analysis of two marginal conventional discoveries on the former's 28th Round acreage, underpinning these with Kimmeridge Clay shale oil potential, and demonstrating an economically feasible development using subsea equipment, hooked up probably to an unmanned minimum facilities platform, tied back to existing infrastructure.
So two types of opportunity, sometimes available in the same place, and very do-able provided the infrastructure isn't decommissioned…..
Decommissioning in the North Sea does seem to be a ‘hot' topic at the moment, with companies perhaps beginning to realise that the traditional approach – to take a ‘finger in the air' estimate of the potential costs to put into their accounts and then breathe a sigh of relief when the oil or gas price rises and so pushes Cessation of Production (CoP) further into the future – is no longer appropriate.
A problem we need to solve is that the total cost of North Sea Decommissioning may be up to £100bn and we the taxpayer may be on the hook for half of this.
Being of the “lower for even longer” persuasion as far as oil and gas prices are concerned, I see two solutions:
Either: we accept that much CoP is upon us and find a way to cut the costs of Decommissioning. My colleagues at Petromall have developed some Insights which I commend to you.
And/or: we bring on stream a whole new generation of discoveries – as discussed above, whether new ones (shale oil, for example) or existing ‘marginal' discoveries – that means much existing infrastructure gets a new lease of life, via subsea developments, minimum facilities unmanned platforms, tie-ins to existing lines etc.
And to state the obvious, we must find a way to ensure that ‘future useful' infrastructure is not scrapped because of some ‘local' CoP event……..
For more on this region, take a look at this review of the aforementioned recent Finding Petroleum event.
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