The surge in U.K. North Sea exploration and development will continue in 1992.
That's the prediction of two British sources.
In a survey of European spending for offshore operations, a consultant's report said spending will hit a record when figures are in for 1991 and continue at that high level into 1992.
In addition, British Energy Minister Colin Moynihan said that as many as 220 exploration and appraisal wells could be drilled off the U.K. in 1992, compared with 190 expected during 1991.
Moynihan said 156 wells had been completed by the end of October. The drilling estimates came from a Department of Energy survey of oil company drilling intentions.
Looking at development, Moynihan said 17 new projects worth $7.5 million were approved in 1991 and 19 more projects worth $4.8 million were under consideration.
ANALYST'S OUTLOOK
Smith Rea Energy Analyst Ltd., Canterbury, England, said the European oil and gas industry is spending about $15 billion/year offshore out of a world total of $77 billion.
By the turn of the century, European spending could still exceed $16 billion, but Europe's present dominance in world offshore outlays would be reduced.
Smith Rea identified 225 undeveloped discoveries and fields under development in the U.K. North Sea, as well as 80 each in Norway and Holland and 17 in Denmark. It said new technologies, particularly subsea separation and multiphase flow, will be prominent factors in ensuring that many small oil fields in this inventory eventually will see development.
THE ROLE OF GAS
Gas, said Smith Rea, is likely to become the predominant factor in the longer term development of the industry.
Prices have risen following a surge in demand with the political changes in Europe and the interest in combined cycle power generation. The environmental virtues of gas and the possibility of a carbon tax in the European Community are likely to increase demand further.
In the longer term, extension of the European pipeline system and aims of the EC's single market could encourage a significant degree of gas to gas competition.
"With the very large reserves that might then be available to Europe, prices may weaken," Smith Rea said. "Such processes must affect the oil market, reducing demand and depressing the price.
"The long term implications of the increased share of natural gas in the total energy mix to virtually all companies engaged in offshore activities are likely to be fundamental and far reaching."
Copyright 1992 Oil & Gas Journal. All Rights Reserved.
