North Sea reserves life pegged at 25 years

The North Sea has enough oil and gas reserves to enable its operators to produce at current rates for at least another 25 years, although the U.K. and Norway are expected to be major offshore plays for many years after that. Sam Laidlaw, Amerada Hess Corp.'s president and CEO, told the Offshore Northern Europe conference in Aberdeen last week that new technology applied in existing fields and new discoveries continue to expand North Sea reserves.

Sept. 15, 1997

3 min read

David Knott
Senior Editor

Sam Laidlaw, Amerada Hess Corp.'s president and CEO, told the Offshore Northern Europe conference in Aberdeen last week that new technology applied in existing fields and new discoveries continue to expand North Sea reserves.

He said, "If we look at the last 10 years, despite a relatively modest number of large field discoveries and the depletion of the reserve base from production by some 21 billion bbl, official estimates of proven and potential remaining reserves in the U.K. and Norway combined have risen by 16 billion bbl."

But Laidlaw said the potential resource base in the North Sea is likely to include more gas than in the past. This has strategic implications for investors, especially in Norway.

He said, "The potential reserves are also likely to be found in deeper water. Eighty percent of Norway's potential reserves in are in deep water, as are 50% of the U.K.'s.

"While the deep waters and Atlantic margin do offer large field potential, even with advances in 3D seismic technology, the inherently greater risk of these plays will limit access to those with the data, financial resources, and drilling equipment."

Laidlaw predicts the mature areas of the North Sea will continue to yield small discoveries, challenging operators and suppliers to reduce development costs still further.

New strategies

The stability of North Sea regional governments and a progressive re- gime-at least in the U.K.-have continued to keep investment in the area attractive, despite increasing competition from other producing regions around the world.

"As to the participants," Laidlaw said, "the major oil companies will continue to dominate the resource base, but they will adopt differing strategies.

"Some will harvest their position around infrastructure, others will invest heavily in deep water, and some perhaps will exit altogether.

"The national oil companies will also remain active players, although with the continuing process of privatization they will be motivated increasingly by shareholder returns rather than security of supply."

Laidlaw predicts independents will continue to play a significant role in development of new play concepts and application and transfer of technology.

"Some independents will elect to specialize in parts of the value chain, including mature field abandonment; others will become integrated but differentiated from the majors by the geographical areas they are active in or by the processes they employ.

"New sources of competition, however, will come from European energy and power companies seeking to integrate upstream and service companies with greater financial and technical capability to absorb reservoir risk."