New Oil Forecast Cheers Britain
North Sea production forecast at record levels in mid-'90s, despite earlier fears of decline
OIL and gas production in the North Sea is heading for a record level in the mid-1990s.
Some 3 million barrels a day or better will be extracted, 20 percent higher than the previous record notched up seven years ago.
That is the view of British oil industry analysts, who say more modern techniques and a continuing high level of wildcat discoveries in the North Sea have made a revision of former forecasts inescapable.
Their predictions are good news for whichever political party finds itself in power in Britain in the middle of the present decade.
North Sea oil has been one of the few consistent growth factors in the British economy in the past 15 years, and the prospect of still higher oil and gas production to come has been greeted with delight by the ruling Conservative and opposition Labour parties.
Some 80,000 jobs in Scotland are dependent on North Sea oil and gas. Home prices in Aberdeen, the onshore center of the British North Sea oil industry, are among the few in Britain to have held relatively firm in the current nationwide property slump.
Alexander Kemp, an energy specialist at Aberdeen University, says more good news is likely beyond the end of the century. He predicts a further production peak 10 years from now, with oil and gas extraction together amounting to just under 3 million barrels a day (b.p.d.).
His view is reinforced by David Harding, chief exploration executive in Europe for British Petroleum (BP), which accounts for half of the current production from the British sector of the North Sea. "We see the area as a development with a wealth of opportunities from smaller fields," Mr. Harding says. "We're a lot smarter than we used to be. We have new discovery and development techniques, and we can use smaller platforms - in some cases no platforms at all."
In the 1980s BP lifted most of its oil from its huge Forties Field, but it is now having to concentrate on extracting petroleum from smaller fields, using sophisticated technology.
Britain's Department of Energy estimates that about one-third of the North Sea's 32 billion barrels of recoverable oil has so far been brought ashore. Two-thirds of that output has been from fields with reserves of more than 500 million barrels. Half the remaining oil will have to come from discoveries with reserves of under 100 million barrels.
"That is a challenge, but we are convinced that we shall soon be seeing a higher level of production than ever before," Harding says. He calls the North Sea a "mature" oil region, with plenty of long pipelines the industry can "tie into."
"We don't have to spend huge amounts of money on pipelines, and that gives us a chance to do things we couldn't have done 10 or even five years ago," Harding adds.
The new optimistic output forecasts follow figures released in December which were initially interpreted as heralding a decline in North Sea oil production. Production in November, the Department of Energy announced, fell by 64,000 b.p.d., ending six months of unbroken growth.
It later turned out that the drop was prompted by a sudden falling away of domestic energy demand. Government officials now speak of the November figures as a "blip" and forecast an early resumption of growth.
Another key factor in North Sea oil and gas expansion, analysts say, is that safety work on many undersea wells made necessary by the Piper Alpha disaster three years ago, in which 167 people were killed, is now virtually complete. This means that many existing wells are coming back on stream.
Investment in the North Sea is currently running at British pounds4.5 billion ($8.5 billion) a year. More than 200 new wells were drilled in 1991, and with a success rate of around 1 in 6 that means 30 to 40 wells coming on stream in the next year or two.
Grampian Regional Council, which borders the British North Sea sector, said in its 1991 annual report that as many as 90 oil and gas fields could be developed in the next 20 years, in addition to the 68 already either planned or in process of development.
Neil Thomas, of the oil analysts Wood MacKenzie, says that in the next few years oil production will increase steadily. "By the middle of this decade we shall see levels similar to those in the boom period of the mid-'80s." In 1985, output reached 2.5 million b.p.d.
Professor Kemp is even more bullish, anticipating a figure of more than 3 million b.p.d. by mid-decade, and an additional peak around 2003. "We can expect a significant amount of production beyond the year 2020, and with continuing exploration success, the whole of the North Sea could actually last until the middle of the 21st century."