Oil production in the UK North Sea reached a peak of 2.63 million bld in 1985. As widely
predicted in the 1970s and early 1980s, output then declined sharpty, down to 1.8 million bld
in 1991. The surprising feature of subsequent production development was a resumption of
growth after the 1991 trough to a new peak of 2.49 million bid in 1995.
This large increase in oil output between 1991 and 1995 occurred despite a
considerable decline from fields where production had began before 1985 (The 1985 Group
of fields as they are labelled in this study). These fields which, of course, accounted for the
whole UK North Sea output of 2.63 million bld In 1985 produced only 1.08 million bld in the
second peak year of 1995, while The New Fields (those brought into operation after 1985)
contributed 1.42 million bld. More tellingly, The New Fields added almost 1 million bld to UK
North Sea oil production between the 1991 trough and the 1995 peak, making up for a
decline from the old fields of 0.31 million bld during this period, and adding a net increase of
0.67 million bld to the total.
Different factors may explain this resurgence of UK North Sea oil production.
Economists tend to focus on prices to explain changes in output, but the price of oil was not
much higher in the period 1991-5 than it was between 1985 and 1990 (ignoring the short
Gulf War episode). In fact, two other significant factors were at play throughout the 1980s
and early 1990s. The first was a relaxation of the petroleum fiscal regime in the UK, which
influenced the prospective rate of return on certain projects. The second was a vast array of
technological changes, which resulted in major cost reductions. Both sets of factors turned
hitherto unattractive projects into commercially viable ones.
GreyZone wrote:One thing that bothers me is the underlying assumption of some people that technological breakthroughs from the 1980s or 1990s have not yet been applied to other existing fields. In fact, the opposite appears to be true - as soon as a new technological breakthrough is available it is applied. Further, each successive breakthrough becomes more expensive to apply. To make using those breakthroughs worthwhile, the real price in constant dollars has to go up but sometimes it doesn't go up enough or other factors drive profit down to where you don't have enough cash to do what you wanted to do anyway.
Right now even though prices are fairly high, projects are being cancelled instead of continued due to the higher price. What's happened is that everyone in the chain wants a bigger piece of the oil profit pie. What this is doing is squeezing the exploration teams with the consequence that they are cancelling almost 25% of marginal projects previously planned. What they are seeing is that in light of reduced margins, projects that they once thought would be profitable at $60 per barrel will now require between $100 and $150 to make a profit.
Alfred Tennyson wrote:We are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
ReserveGrowthRulz wrote:I've often wondered how people can dismiss reserve growth so easily, Lynch has a paper where he points out, in Campbells own tables showing his peak oil calculations, reserve growth, and if someone wants NOTHING to do with reserve growth, its Colin.
ReserveGrowthRulz wrote:I don't know about anyone else, but it sure looks like you and Lynch are talking about two completely different things in different ways, and then graphing them differently, and then you are claiming victory because they are different.
It also appears that the authors fall prey to statistical illusions. “Creaming curves” are published for some regions, where the fields, when ordered by size, appear to yield an asymptote which is interpreted as evidence of an approaching limit. But ordered by date of discovery, the asymptote is not as clear, as Figure 1 shows for the UK. No explanation is given as to why ordering by size is more appropriate than by date of discovery, and in fact, the asymptote appears to be nothing more than a statistical artifact that is, use of a large population, ordered by size, will frequently yield an exponential curve with an apparent asymptote. This is especially true of oil and gas exploration, where basins usually hold many more small fields than large ones.
ReserveGrowthRulz wrote:....Ohio was used by Hubbert in one of, if not THE original paper, as an example of his bell curve. The problem is, when the extraordinary pressures of the boycott/embargos in the 70's was applied to this "depleted" area, the curve reversed and Ohio climbed back to a large portion of its "old" peak production.
Pops wrote:So for my uneducated mind, the discovery curve is the key to future production.
I have seen lots of models of the production curve but not one of the discovery curve that attempts to include reserve growth.
Is there such a model?
ReserveGrowthRulz wrote:The arguement over how to "grow" the volumes itself would lead to a pretty wild discussion I'm betting.
ReserveGrowthRulz wrote:Doing it would have the effect of pumping up the volume of the discovered fields to some pretty large sizes.....and would make modern discovery sizes much, much closer to what supply/demand equations might require to keep things in balance.
ReserveGrowthRulz wrote:You can understand how the powers that be might not be enthused
... when you only use 1/10th of the total ACTUAL discovered volume.
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