20 new fields needed every year in the UK
Posted by Chris Vernon on June 5, 2006 - 5:00pm in The Oil Drum: Europe
The Scotsman today reports on a new study by Professor Alex Kemp and Linda Stephen of Aberdeen University on the prospects for the UK Continental Shelf (UKCS) until 2035.
Professor Kemp, a leading oil expert with the university's Department of Economics, said that a "striking feature" of the prospects for undeveloped fields was their relatively small size, with the average size of the probable and possible fields estimated at under 15 million barrels of oil equivalent. He said: "The long-term future of the UKCS depends on the successful development of large numbers of small fields and enhanced oil and gas recovery schemes. The remaining reserves are large but they are mostly located in relatively small accumulations."
But he revealed that the study's economic modelling suggested total production, which stood at 3.35 million barrels of oil last year, could reach the industry's target of maintaining production at a level of three million barrels in 2010, perhaps reach two million barrels by 2020 and one million barrels in 2030, despite the dwindling role of production from major North Sea platforms.Kemp must be talking about oil and gas here since oil extraction was only 1.8mbpd last year not 3.35, his rates of decline are surprising though. Just looking at the numbers above suggests a rate of decline of 2.2% to 2010 then 4% to 2020 and 6.7% to 2030. These decline rates seem optimistic in light of the declines we've seen recently.
Between now and 2030 a cumulative total of 25 billion barrels of oil could be produced, compared with the 35.4 billion already extracted from the UKCS since the first North Sea oil find.Kemp's forecast cumulative production of 25 GB between now and 2030 should be compared with this graph kindly provided by TOD member Westexas indicating just 17GB remaining.
Click to enlarge
Interestingly Kemp's total 35.4 + 25 = 60.4GB, equal to that shown above. Why does Kemp think we're living in 2003?
Perhaps the economist's key point is this:
Professor Kemp said: "These figures depend on a high rate of new field development requiring on average over 20 new field developments per year. This is because the average size of new field is likely to be quite small - less than 20 million barrels of oil equivalent."As the remaining oil and gas is left in a large number of smaller fields the logistical challenges are likely to be greater than faced in the past. The title is 20 new fields needed each year, more accurately the article could have been titled '20 new fields needed to meet arbitrary depletion envelope'. However we are left questioning whether such prolific development is feasible.
Personnel
Editors
Contributors
Peak Oil Primers
Archives
- November 2010 (3)
- October 2010 (6)
- September 2010 (4)
- August 2010 (7)
- July 2010 (6)
- June 2010 (7)
- May 2010 (2)
- April 2010 (8)
- March 2010 (4)
- February 2010 (6)
- January 2010 (3)
- December 2009 (5)
- November 2009 (8)
- October 2009 (12)
- September 2009 (6)
- August 2009 (5)
- July 2009 (11)
- June 2009 (8)
- May 2009 (16)
- April 2009 (10)
- March 2009 (7)
- February 2009 (10)
- January 2009 (15)
- December 2008 (9)
- November 2008 (9)
- October 2008 (9)
- September 2008 (13)
- August 2008 (10)
- July 2008 (14)
- June 2008 (23)
- May 2008 (16)
- April 2008 (12)
- March 2008 (16)
- February 2008 (9)
- January 2008 (13)
- December 2007 (13)
- November 2007 (16)
- October 2007 (22)
- September 2007 (8)
- August 2007 (9)
- July 2007 (16)
- June 2007 (8)
- May 2007 (7)
- April 2007 (7)
- March 2007 (10)
- February 2007 (10)
- January 2007 (12)
- December 2006 (9)
- November 2006 (15)
- October 2006 (4)
- September 2006 (5)
- August 2006 (5)
- July 2006 (9)
- June 2006 (5)
- May 2006 (10)
- April 2006 (9)
- March 2006 (13)
Vital Trivia
License
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 United States License.
I too share Chris' concerns that projected decline rates in Kemp's study are unrealistically low - remember this DTI based graph which shows N Sea production being 'more or less all over' by 2020. We've already experienced oil output falling by 42% from 1999 (peak year) to 2005 and, apart from a year when decline will be temporarily arrested by commissioning of Buzzard I'd expect oil to continue declining at a fairly steep rate.
Here's a quote from the recent JESS report regarding projected N Sea gas decline:
On this basis it would seem reasonable to assume decline rates for both oil and gas of 7% pa i.e. well above those assumed in the Kemp report. The N Sea has seen extensive application of new oilfield technology which has primarily had the effect of expediting recovery and we now face the consequences of such early / rapid recovery i.e. steeper decline rates post peak. In addition we need to keep in mind that the giant gas fields in the southern North Sea are now very mature and are thus facing the 'gas cliff' which is typically associated with gas reservoirs once Qt (production / URR) passes 80%.I think Kemp is right to be cautious re development prospects for sub 20m bbl fields, not least because much of the existing major N Sea infrastructure is approaching the end of its design life and new infrastructure on such a scale (Forties / Brent / Frigg pipelines and production gathering platforms for example) could in no way be justified for such small reservoirs. Forties was 2.8 Gbbls and even a cluster of 20 new sub 20m bbl fields would only be 14% of the size of Forties. Majors such as BP and XOM are rather 'voting with their feet' by the (increasing) scale of stock buybacks as opposed to new field exploration and development.
If they are truly 'new' (in that they have not already been previously discovered, left behind and now look attractive at current oil prices), then that will be a minimum of 40 exploration wells per year. So the plan is year on year exploration in a very high cost environment at a time when oil service company costs, rig rates etc are all high?
If an Operator is going to spend serious money to drill exploration wells,then why not go looking for 'elephants' off Nigeria, Angola or elsewhere. Ok, so the UK is politically stable, but it looks increasingly that the elephants have been found.
If the oil price does drop significantly (which I doubt) then 20mboe fields become correspondingly less attractive.
It doesnt add up unless it becomes a UK strategic imperative with significant financial incentives.
No. Maybe this is why the Chancellor is grabbing what loot he can in taxes, knowing that the game is over and he is taking what he can before the operators scarper.
8 exploration 9 appraisal and 46 development wells
This brings the total exploration wells in 2005 to 41 due to a burst of 19 in the third quarter but apart from this quarter drilling activity only a little increasd over that of the last 5 years. It does not look like the sort of activity requires to run up the down escalator of decline in older fields and ever smaller new finds.
Exploration Wells and raw numbers of Mobile Offshore Drilling Units has dropped yearly up until the up-tick of last year. Fleet deployment and wells improved in 2005, but I think this is the 'last hurrah'.
A good description of 20 x 20 would be 'puddle sucking'.
I am assuming that 20mboe is the URR.
There is a global shortage of mobile offshore drilling rigs. The operators would be better sweating these MODU rig assets in an area of the world where you stand a chance of finding a 100mboe - 250mboe field with the added bonus of possibly hitting an elephant. (I am assuming an elephant is now about 0.5- 1Gboe these days).
I think the tail end of small fields will go undiscovered or get left behind unless:
-They are close to and have access to infrastructure
-They can be drilled from existing platforms
-Exploration costs are tax-offset.
-The tax regime is highly incentivised even at 100 US/bbl.
I think the majors have got bigger problems, bigger fish to fry. And anyway, are there really 20 new fields to discover each year, year on year, for, say even 10 years?
Sherrif:'Its the last act of a desperate man'.
Townsman: 'I dont care if its the 1st act of Henry the 5th... we are leaving'.
This graph is valid for the UK only and shows that doubling the number of small fields will only increase the URR by 2 Gb (Conventional crude oil only). The oil production is entering the tail portion of the parabolic fractal law and there is not much oil left!
and I was hoping to make it to retirement...
BTW, as I have frequently pointed out, the frantic post-peak drilling program in Texas had no discernible impact on production, which has not stopped some state employees from talking about vastly increasing our production through the use of--drumroll please--better technology!
My North Sea (crude + condensate) HL plot (posted courtesy of Khebab): http://static.flickr.com/67/158784886_5c7a813465_o.png
This shows remaining recoverable reserves of about 17 Gb for the entire North Sea.
BTW, did you see the Energy Bulletin article on Holland's gas depletion problem?
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2006/06/08/cndutch08.xml&menuId=242&s Sheet=/money/2006/06/08/ixcity.html
The North Sea remains a fascinating case history for me because it peaked at exactly the same HL point as the Lower 48, 29 years later than the Lower 48. As I have frequently pointed out, so much for better technology.
You can compare the North Sea HL trend to the HL plots of Texas and the Lower 48 at: http://graphoilogy.blogspot.com/2006/05/texas-and-us-lower-48-oil-production_25.html