Capabilities to exploit the 21st century North Sea
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Exploring the options for the 21st century North Sea
A few years ago, many thought the North Sea to be in terminal decline – at least from the point of view of the Supermajors as they looked to manage their exit from the North Sea. A new breed of low cost operators had begun to move in and take on this ageing asset base which was failing to attract the level of investment required to sustain production. Never was this more visible than when BP sold their iconic operating stake in the Forties field to Apache for $1.3b in early 2003.
Quite simply, BP would not, or could not, extract the value remaining in a field that was producing a fraction of its peak 20 years ago when the economics needed to be assessed against a global portfolio of opportunities, all vying for the same finite capex investment. BP’s sale of Forties to Apache in 2003 was seen as an important statement of intent, and the start of a Supermajors exodus from the North Sea. Apache successfully increased production to near 2000 levels, and a new era of low-cost North Sea operations seemed inevitable.
But what a difference a few years makes. At $45-$70/bbl, not only do previously marginal fields become economic (take Clair, discovered in 1977, but first began production in 2005), but application of new technologies to enhance reserve recoveries also becomes an attractive proposition. Broadly speaking, only half of the North Sea’s oil has been recovered, and the Supermajors are re-engaged to extract as much of the remaining hydrocarbons as possible. Both BP and Shell are building new offices in Aberdeen, and the message is very much that they are here to stay.
For further information, download our publication Capabilities to exploit the 21st century North Sea. (PDF, 2067 KB)