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Understanding oil and gas opportunities in the North Sea
In this episode of Upstream in Perspective, Paul Markwell, Vice President of Upstream Insight, shares insights about how the North Sea fits into the global oil and gas landscape. Here's an excerpt from the conversation.
In recent months, we've seen operators investing more in the North Sea. How relevant is the North Sea in the global oil and gas scene?
If you think of the North Sea in volume terms, it's producing, in liquid around 2.4 million barrels a day, and in gas that is significant for the European markets. So, on a local level, it's very significant. On a global level, the thing that's very interesting is that a lot of the North Sea is in decline. The question is how much can that be arrested. How much of that can be turned around, or flattened? I think one way to think about it is if you only did essential maintenance to existing fields in the North Sea, you'd probably decline by about 500,000 barrels a day every 3 years. That is very significant for the global market so what happens to the North Sea as an investment is important.
The other thing that I think is really important about the North Sea being like this for decades is that it's important for technological points of view. It's one of the largest, most mature offshore provinces so it's been a testing ground and a place to apply technology for a long time. That's equally true as it grows into its most mature phases. I think it's very important for the technology development and for the local market providing those technologies. It's an important case as a declining basin as well.
The North Sea forever seems to regenerate itself. How would you describe its maturity?
Yeah, it's interesting, it's a basin that never gives up. If you look at the U.K. segments of the North Sea, it's been going down and up for different reasons for a long time. The first thing I'd say about North Sea maturity is that it's not all mature. It's actually a series of different segments. It's convenient to call the North Sea one thing. If you actually look at it on a map, it would spread along the southern gas basins in the U.K. and the Netherlands and Germany, which are very mature gas plays. Then if you go up north, and you're getting into Central North Sea, which is much more mixed oil and gas of different ages-new developments as well as the old ones. In the northern North Sea, you've got almost grandfather fields that came onstream in the 70's.
West of the Shetlands, which is Northwest of the U.K., you've got a whole new segment again-very much a new development in deep water. I think it's got all the pieces. I think the North Sea is what we would call a potential offshore super basin. Super basin is a term we use to reflect different parameters-in terms of the scale and resources left to be produced, infrastructure that is available, the competitive landscape, the availability of the supply chain-and the North Sea is all of those things. It really is a mature province with lots of segments and lots of things to play for.
You just mentioned it's potentially an offshore super basin, so what is needed to make the most of its future potential?
In order to make the most of it, a lot of different things need to happen. If you ask the one thing, I would say it's about innovation. Innovation technically, in terms of new technology, or ways to apply technology. Also, commercial innovation-how partners collaborate, how suppliers incentivize, how you can make use of existing infrastructure, as well as operational capabilities that need to be enhanced to keep costs down.
I think those are the fundamental capabilities that operators need to have. Another thing though is in a mature basin that's in decline, there's an urgency to invest. Invest to bring onstream or tie back small pools into existing fields while those fields are still producing and while you still have that opportunity. It needs activities-it needs financing and it needs the type of players willing to invest and get after stuff. That's sometimes a challenge for the mature areas. Of course, the government is another ingredient to exploit super basins. The government policy and incentives, plus new players, needs to be there to exploit a super basin.
Listen to the full interview with Paul Markwell on the North Sea opportunities in Upstream in Perspective. Learn more about our coverage of the North Sea and other key basins around the world in our upstream insight offering.
Posted 13 July 2018
This is an excerpt from Upstream in Perspective and has been professionally transcribed as accurately as possible. Please note, some words and phrases may have been unintentionally excluded.
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