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HOW TO SOLVE A PROBLEM LIKE THE NORTH SEA
ANALYSTS
HAVE ALSO
WARNED OF
THE DANGERS
OF SLOWING
THINGS DOWN
TOO QUICKLY
I
n mid February, a fishing boat sank off the
coast of Yell, Shetland (Scotland) and
came to rest very close to a gas pipeline.
The creel boat lay within metres of BP’s
Magnus EOR gas pipeline, which transports gas
to the Magnus field to help with oil extraction.
The pipeline was unharmed, but the coast
guard set up a 500 m exclusion zone around
the site, as a precaution.
The Shetlands have been making headlines
this month for other reasons: new gas fields are
expected to boost supply now that Total has
opened its £3.5 billion Shetland Gas Plant. Gas
from the Laggan and
Tormore fields, which
are located 125 km north
west of the Shetland
Islands (on the edge of
the UK continental shelf
towards the North
Atlantic ocean), are now
linked up to the plant.
Gas is transported
towards the Scottish
mainline via a pipeline.
The plant, which is said
to have been the biggest construction project
in the UK since the London Olympics in 2012,
will produce 90 000 boe/d. The two gas fields
are estimated to hold a 20 year life expectancy
and the plant, which lies to the east of the
Sullem Voe Terminal, will provide 8% of the
UK’s gas needs.
This is a rare boost for the North Sea oil
and gas industry, as it experiences a difficult
era: some 65 000 jobs have been lost since
2014, according to reports. Drilling is at an all-
time low, reduced exploration activity means
that new finds are few and far between and
existing reserves are becoming depleted, with
little money spare to invest in what reserves
are left to be eked out.
A new strategy from the Scottish
government has been released early this year,
entitled ‘Maximising Value’. It details the
changing commercial and regulatory
environment that the sector must tackle head
on. It suggests that North Sea participants can
weather the storm by forging new
technologies and expertise in areas such as
subsea testing, asset integrity, digital operations
and, crucially, decommissioning operations.
Taking a different view, Premier Oil CEO
Tony Durrant appealed to the Oil and Gas
Authority (UK) to force companies to keep
pipelines open during times of low oil prices.
He said: “The authority is a new body and I’m
not sure it has all the legislative powers it
might need to bang heads together … It is
important we have some overriding authority
that could impose solutions if necessary.” He
went on to say: “In other countries it would
be understood that the host government has
an enforcing role.” Warning of the dangers of
decommissioning too soon, Durrant argues
that any parties shutting
facilities that they share
with other producers
would prematurely
sideline oil and gas
fields, leaving the sector
in a vulnerable position
when oil prices begin to
rise again.
Analysts have also
warned of the dangers
of slowing things down
too quickly. Douglas-
Westwood predicts that a quarter of
production facilities could close over the next
10 years, and Wood Mackenzie says that the
UK is the country third most likely to see its
fields permanently shut down as a result of
low oil prices.
The National Subsea Research Initiative
(NSRI) has recently called on the industry to
collaborate on unlocking the potential of
small pools of hydrocarbons in the North Sea.
Dr Gordon Drummond, Project Director of
NSRI says: “Solving the small pools challenge
could yield a reward potentially greater than
predicted with regards to the domestic
market. It would enable the already capable
UK supply chain to export its knowledge,
products and services to international markets,
thus safeguarding jobs, revenue and
maximising economic recovery from the
North Sea.” In this version of events, the UK
becomes the ‘go-to’ nation for boosting,
bolstering and buoying up faltering
production. The North Sea might not know
how to kick start things again in the current
climate, but it sure can wind things down with
style.
