10 comments on 20 new fields needed every year in the UK
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10 comments on 20 new fields needed every year in the UK
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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'.