MER non-collaboration jeopardises 1-billion-barrel new production lease of life for N. Sea exploration

Dr Gordon Drummond,
Dr Gordon Drummond

The National Subsea Research Initiative has called on the industry to come up with a ‘collaborative approach’ to unlocking the potential of small pools of hydrocarbons in the North Sea.

This could pave the way to recovering up to 1.8 billion barrels of oil which currently cannot be exploited economically.

These ‘small’ reservoirs represent around 5% of UK reserves or 20% of future UK production, which could deliver a potential $19 billion in capex, $16 billion in opex and a return to the Treasury of $8 billion in revenues.

Dr Gordon Drummond, NSRI Project Director, said: “Without some form of intervention, small pools will remain locked in and MER (maximising economic recovery) will not be realised.

“Only by recognising their national strategic importance and taking them together as an industry asset, will we be able to exploit them in an environment where conventional market dynamics have failed.

“There must be a willingness for all involved to work more collaboratively on multi-field applications to explore and speed up the development of near to market technologies to extend the life of the North Sea and maximise economic recovery

“Solving the small pools challenge could yield a reward potentially greater than predicted with regards to the domestic market. It would enable the already capable UK supply chain to export its knowledge, products and services to international markets, thus safeguarding jobs, revenue and maximising economic recovery from the North Sea.”

NSRI was tasked with helping to find the new, disruptive subsea technologies that could unlock these small discoveries and help prolong the life of the North Sea. A series of “hackathons”, which brought industry, technology developers, universities and research institutes together was organised to brainstorm possible technological solutions.

While the technical community believes technology forms part of the solution, the commercial structure of the industry is constraining the economies of scale needed to make the recovery of oil from these reservoirs viable.

Dr. Drummond added: “It is very difficult to de-couple the commercial considerations from the technical aspects.  Access to host facilities and infrastructure, non-collaborative behaviours between operators and small operators who don’t have the finances or the will to develop these resources are barriers to the development of small pools.”

The whole of UK’s oil and gas industry is under intense pressure in the current business environment of sustained low oil prices. The industry is working closely with both the Scottish and UK Governments and its regulator, the Oil & Gas Authority, to adapt.
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