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Page added on April 27, 2013
North Sea Comes Back To Life
– On the windswept hills that line the west coast of the Shetland Islands, roaming sheep bear lonely witness to a surprising industrial comeback.
A gray, metal-and-concrete skeleton slowly emerging from the peat bogs makes up the last leg of Laggan-Tormore, Total SA’s GBP 3.3 billion ($5 billion) project to extract natural gas from the North Sea’s wild western edge. For more than 25 years since its discovery, the field has lain trapped beneath a bed of hard rock and deep, stormy waters. But the French oil company says that by the summer of next year, the gas finally will be liberated, meeting 5% of the U.K.’s needs.
It is a story that has been repeated elsewhere, confounding expectations of decline in the North Sea. Areas that 10 years ago were thought to be thoroughly exploited, or too technically challenging, now are yielding major new developments.
“Technology and science showed there is oil where people thought there wouldn’t be oil any more,” says Manoucherh Takin, from the London-based Center for Global Energy Studies.
U.K. North Sea oil and gas production has dropped by more than half since its peak of around 4.6 million barrels a day in 1999 as aging fields have become depleted. Norway’s similar-size peak came five years later, but production has dropped almost 15% since then.
But now, new technology, assisted by higher oil prices and modest tax incentives, is forecast to reverse that decline.
This will bring significant economic benefits for both countries. The U.K. oil industry employs around 440,000 people and last year contributed GBP 11.5 billion to flagging government coffers — more than any other sector. Oil and gas accounts for half of Norway’s exports and 20% of its gross domestic product.
Interest in the North Sea among international energy companies has been so great that support services are in danger of maxing out.
West of the U.K.’s Shetland Islands, where the North Sea merges into the Atlantic Ocean, lies the distant Laggan-Tormore discovery. “There are mighty storms, the subsea water is very cold,” says Jean-Pierre Minster, the head of research and development for Total.
The extreme environment meant the standard way of tapping offshore oil since the 1960s, a steel platform on the surface, would have been too risky and costly, says Patrice de Vivies, the company’s vice president for Northern Europe.
After years of research, technology that didn’t exist when the field was discovered in 1986 became the key to unlock its potential, he says.
Total reinforced its drill bits to pierce the hard sedimentary rock above the reservoir, Mr. Minster says. It avoided the stormy surface by locating extraction equipment on the sea bed and will operate it remotely from shore. To overcome the extreme subsea cold, the company found new insulating materials to sheath pipes that carry gas from the wells to the shore.
New technology has enabled other nearby developments.
Advanced seismic sensors on the sea floor, providing a clearer image of geological structures than previously possible, will enable Chevron Corp. and its partners to drill more-efficiently targeted wells to develop the $6 billion to $8 billion Rosebank project, the U.S.-based company says. The project could eventually yield as much as 240 million barrels of oil equivalent, making it one of the largest new U.K. prospects.
BP PLC says new ways of gathering and processing seismic data are helping the British company and its partners move ahead with a third phase of the $9 billion Clair field development, originally discovered in 1977.
Within five years, fields west of Shetland are expected to produce 17% of the U.K.’s oil and gas, says Total’s Mr. de Vivies. That will help the country’s production rebound back above two million barrels of oil equivalent a day by 2017, compared with 1.55 million barrels last year, according to Oil & Gas U.K., a trade group.
The second area driving the North Sea revival is around 200 miles southeast of Laggan-Tormore, in Norwegian waters, where Sweden’s Lundin Petroleum AB has been digging through major oil companies’ leftovers.
“The consensus at the end of the ’90s was that the fall [in discoveries] on the Norwegian shelf was due to a lack of resources,” says Hans Christen Ronnevik, Lundin’s exploration manager. “That was a view we didn’t subscribe to.”
“We are hard-core geologists and geophysicists who look at data and interpret them in new ways,” he says. By looking through old seismic surveys with a modern eye, Lundin guessed that there was a big undiscovered field in the Utsira High, a geological structure that is one of the most heavily-drilled areas in Norway, he said.
Finally, in September 2010, Lundin drilled what turned out to be the largest oil discovery in Norway in about three decades, now called Johan Sverdrup and shared with Norwegian state oil company Statoil ASA. The field contains an estimated 1.7 billion to 3.3 billion barrels of recoverable oil, equivalent to up to six times Norway’s current annual crude output.
That discovery has inspired others. Statoil this month said it had found between 40 million and 150 million additional barrels of oil and gas near the Gullfaks license in the northern North Sea, a field which started production back in 1986.
Such discoveries could mean that Norway “will continue to discover as much as one billion barrels every year for the next 20 years,” says Jarand Rystad, chief executive of Oslo-based consulting firm Rystad Energy AS.
The Norwegian Petroleum Directorate says it expects the country’s total oil and gas production to bottom out at 3.7 million barrels of oil equivalent a day this year and rebound to 3.8 million barrels by 2017.
There is a danger that the North Sea could fall victim to its own success.
As activity increases, the supply chain is being stretched, says Ross Cassidy, lead Norway analyst at U.K.-based consulting firm Wood Mackenzie. The availability of drilling rigs has become a problem, particularly in Norway, where drilling for around five of the 50 wells expected to be sunk this year have been delayed because of rig shortages, he said.
“That’s the No. 1 challenge,” to the revival of the region, Mr. Cassidy says.
13 Comments on "North Sea Comes Back To Life"
Arthur on Sat, 27th Apr 2013 3:03 pm
There is a competition going on between earth’s capacity to deliver fossil fuel and the capacity of the earth’s atmosphere to absorb the results. It is possible that ‘conventional peakers’ underestimate the effects of the ‘the more you look, the more you find’ principle and that in the end the atmosphere is going to buckle first.
DC on Sat, 27th Apr 2013 3:59 pm
RoFL@RigPorn. There is a ‘shortage’ of rigs because they are very capital intensive artifacts. And amazingly expensive just to operate, whether they are making a ‘profit’ or not. Thus, there are so many built. Compound that with there are fewer and fewer ‘big’ strikes for these rigs to vacuum up, that makes it even less profitable to deploy more of them. Ever more expensive rigs, chasing smaller and smaller ‘plays’ is the future.
Just like the whale trade. They too, deployed ever more, and more advanced ships to chase fewer and fewer whales, until it became clear, that strategy was simply never going to work, no matter how much tech and money was thrown at the ‘problem’ (exterminating the source). Same idea with these mega expensive oil projects and rigs. Nor is the North Sea going to become a more forgiving environment for those expensive fragile rigs to operate in.
Kenz300 on Sat, 27th Apr 2013 5:26 pm
Fossil fuels continue growing more expensive to extract and cause environmental damage.
Wind and solar are safer, cleaner and cheaper when you add in the cost of environmental damage of fossil fuels.
The fossil fuel industry is doing all they can to hold on to their old business model and their profits. As the price of wind and solar continue to fall the fossil fuel industry will see how futile their efforts are.
Climate Change is real….. the sooner we transition to safe, clean alternative energy sources the better for everyone.
Steve on Sat, 27th Apr 2013 6:44 pm
No wind/solar farm has ever been built using wind/solar energy. If we are using all the fossil fuels produced daily to sustain business as usual, where will the FF come from to build out the alternatives?
Arthur on Sat, 27th Apr 2013 7:03 pm
“No wind/solar farm has ever been built using wind/solar energy. ”
Not yet.
Although that is not entirely true. The 25% solar contribution on sunny days in Germany to the electricity grid IS in fact being used to manufacture all sorts of things, including solar and wind artefacts.
Steve on Sat, 27th Apr 2013 7:23 pm
Arthur, I hear you, but manufacturing is only one part. Mining, transporting, site prep, erecting, transmission infrastructure, backup power, maintenance, etc. are others.
BillT on Sun, 28th Apr 2013 4:00 am
Steve, Arthur doesn’t want to consider real facts and figures. They don’t fit in with his techie religious beliefs of eternal progress.
Arthur on Sun, 28th Apr 2013 8:33 am
“Steve, Arthur doesn’t want to consider real facts and figures. They don’t fit in with his techie religious beliefs of eternal progress.”
You are putting words again in my mouth, Bill. I do not believe in eternal material progress, industrial society to a large extent is going to collapse, I do not believe in cars, aviation, but I do not believe in your doomer porn either. The ‘Ponderosa’ is the minimum we are going to achieve. Plus low energy footprint leftovers from days gone by.
Fascinating Bill, that you are working to set up shop in the jungle and that you admitted you are going to use solar panels. But, but.. I thought they had negative eroei?! So what is the explanation here? Why would solar panels work in the jungle but not in the west? Questions, questions, questions…
And why are you spending hours per day behind the internet to profess to everybody who wants to hear it that the internet is doomed? What is the logic in that?
Arthur on Sun, 28th Apr 2013 8:55 am
“Arthur, I hear you, but manufacturing is only one part. Mining, transporting, site prep, erecting, transmission infrastructure, backup power, maintenance, etc. are others.”
There is not going to be much mining in the future as most of the material we need is already above the ground. Transport is going to be massively reduced, globalism will be finished. Any idea what happens to a beaker of yogurt these days? I saw a documentary about it years ago. The material is shipped literally from all over the globe… in the future you will get your yogurt from a local farmer, poured into a beaker you will bring yourself. That was the way I remember from the early sixties, when there still was a milkman, who had a cart and horse and large containers of still warm milk, fresh from the cow, poured into cans the housewives brought themselves to the cart. Later the horse was replaced by an electrovan and later the milkman disappeared altogether and small local supermarkets emerged, that survive until the eighties. By that time everybody had a car and from then on got their stuff from big supermarkets.
Now the film is going to be reversed. So what? Happiness is a chair in the garden in the sun, as Epicurus already knew.
Arthur on Sun, 28th Apr 2013 9:16 am
http://www.campinglinderhof.nl/fotos/melkbus.jpg
Everybody in Holland still knows these ‘melkbussen’, they have become a collectorsitem. I have a polished one in the corridor and use it as an umbrella-container. A leftover from the days before fossil fuels started to enter private lives bigtime, after having taken possession of armies and industries first. Melkbussen as a symbol of a very local economy with a few kilometer distance between the cow and the housewives kitchen.
Kenz300 on Sun, 28th Apr 2013 2:00 pm
Solar energy production is expanding around the world. THe transition to safe, clean, alternative energy sources has begun.
Saudi Arabia Looks to NREL for Solar Monitoring Expertise | Renewable Energy News Article
http://www.renewableenergyworld.com/rea/news/article/2013/04/saudi-arabia-looks-to-nrel-for-solar-monitoring-expertise
Ed on Sun, 28th Apr 2013 2:36 pm
All these new discoveries sound large, but so are the declines from existing oil fields. The very best they can do is keep us on the bumpy plateau that oil production has been on since 2005 for a little bit longer. By 2030 Germany will have built out their renewable infrastructure and laughing at the UK for squandering their North Sea oil revenue.
BillT on Sun, 28th Apr 2013 3:04 pm
Local economies will not produce panel or mills of anything but food and clothing and shelter. But, you do not take into account the climate change that could make much of the world, including Europe uninhabitable.
As for living in the jungle with solar panels from China, yep that is the plan. You see, they will last longer than I will so I don’t have to worry about them being replaced do I? One advantage of already living a full life. At 68, I can just watch the rest of the world destroy itself. I fell sorry for my kids and grand kids, but…