Anyone with even half an eye on the North Sea oil and gas sector would be hard pressed to miss the fact that production in the region has been in decline for some time. The past decade has seen domestic oil output almost halve, from 2.7 million barrels in 2002 to 1.4 million barrels in 2010, while the challenge to extract commercial amounts of oil and gas has grown.
But, while the continued decline in North Sea production is inevitable, for BP’s business in the region, there is the opportunity to sustain production at current levels for some time. In fact, with its high-quality asset base, technical capabilities and decades of operational experience in the region’s harsh conditions, BP is at the forefront of the management of a ‘new North Sea’ that still has potentially decades to run.
The ‘new North Sea’ is one where reservoirs that were technologically out of reach 30 years ago are now being developed; hardware replacements allow substantial extensions to field-lives, in some cases up to 100%; and there is continued demand for some of the global industry’s most experienced personnel.
Trevor Garlick, President, BP North Sea – who is also co-chairman of Oil and Gas UK – said: “The conditions and the reservoir complexity mean the area presents some of the greatest challenges in the global oil industry, but BP’s experience in the region places us in an excellent position to continue to invest with confidence in the UK and Norway.”
Today, BP produces more than 200,000 barrels of oil and gas equivalent per day from the UK and Norwegian sectors of the North Sea. It operates more than 40 oil and gas fields, four major terminals and a huge network of pipelines, as well as employing almost 4,000 people.
To achieve this, the business is taking a three-pronged approach: focusing the portfolio, working to get the most out of existing assets, and exploring and developing to build new production.
Although a number of North Sea fields are undoubtedly mature, others are far from spent. Years of familiarity with individual reservoirs, coupled with extensive developments in what is possible from a technical perspective, mean that BP is able to increase recovery at a number of its fields, and continue to produce oil and gas from reservoirs that, by original estimates, ‘should’ have ceased production years ago.
New techniques, such as ‘water alternating with gas’ flooding, are expected to have a significant impact on output from a number of BP’s older reservoirs over the next several years. In addition, the company has spent the past three years renewing its seismic data for almost the entire North Sea, dramatically enhancing its imaging and understanding of existing reservoirs, as well as opening up the possibilities to expand into new ones.
“A new approach to seismic planning and acquisition means our North Sea seismic activity levels are higher than they have been for the past five years,” says Herlinde Mannaerts-Drew, North Sea seismic delivery manager.
Just as upgrading all the radiators in a house without changing the boiler makes little sense, some of BP’s North Sea hardware is being replaced in order to develop the newly-attainable pockets in older reservoirs.
Its Schiehallion field will receive a brand new floating production, storage and offloading vessel in 2015 that will support production for the next 20 years, and possibly more.
“In a lot of cases, the reservoirs are no longer the limiting factors,” says Dave Lynch, vice president for resource. “Some of our assets have tremendous field-life left in them, but facilities that were originally built to last 25 years and have served very well are not necessarily up to the job of producing for the next 20 years or more. By changing and upgrading facilities where we need to, we will be able to safely and efficiently prolong production.”
At the same time, BP North Sea has been working internally to streamline the way it plans and approaches turnarounds and maintenance on platforms, to give more reliability and predictability of operations and production.
Analysts say the North Sea could still hold in the region of 30-40 billion barrels of oil, and it is through exploration and new developments that BP is working to build a sustainable future – developments such as the $7 billion Clair Ridge oil project, the $5 billion redevelopment of the Schiehallion and Loyal fields, the central North Sea Kinnoull and Devenick developments, $1.1 billion and $880 million respectively, and the $6.7 billion Skarv development in Norwegian waters.
In the second phase of development of its giant Clair field, two new, bridge-linked platforms are expected to be installed in 2015, with production due to commence in 2016.
The very fact that these new facilities are being designed for 40 years of production is testament to the life that is still in the North Sea. The new development will have the capability to produce an estimated 640 million barrels of oil, and will provide a hub for future expansion, subject to further appraisal. Peak production is expected to be up to 120,000 barrels of oil per day.
Garlick added: “Our strategic goal in the North Sea is simple. We want to sustain a material, high-quality business for the long term, and our focus is on maximising recovery from our base and investing in high-value assets with growth potential.
“With more than 5 billion barrels of reserves produced to date, and assets that BP believes could yield more than 3 billion barrels in the future, the North Sea looks set to remain a key part of BP’s portfolio for some time.”