The fact that exploration drilling activity is at a record lows in the UK North Sea is well recorded. It's easy to quantify and monitor.
What is not so easy, is quantifying the number of already discovered fields which are currently sitting on oil companies' shelves and could struggle to see light of day in the current market environment.
How to tap these resources and overcome some of the difficulties facing operators in the basin are due to be discussed at subsurface focused conference Devex, mid-May.
Ex-BP research lead Dr Pete Smith, now working with RPS, is set to talk about how to transform development projects in a low oil price world. We spoke to him ahead of the event about where he sees the challenges and opportunities.
What do you see as the main economic barriers to developments awaiting sanction today?
I see two main issues:
The first issue was the main concern for developments in the last period of low oil prices in the late 90’s, however over time the industry became more adept at managing projects within budget and on time, as well, as developing responses to various subsurface outcomes. The main shift this time is in the second issue where there is no guarantee that the infrastructure in the UKCS will remain as new developments are planned.
What approach do operators need to take to meet today’s oil price environment?
Firstly, looking back, operators met the last sustained low oil price in three ways:
I envisage that the present downturn will be met with new examples in these three domains.
However, I do also see the need for government to show leadership in maintaining the key UKCS infrastructure to enable new developments, even to the point of bringing key elements into state control and hence provide stability for future investment.
What mistakes should they avoid?
The main mistake in previous downturns is the length of time it took the industry to shake off confrontational behavior for investments. It took perhaps a decade for the industry to understand the potential of undeveloped resources in the UKCS and West of Shetlands and the need to develop deeper cooperation between companies, suppliers and partners to provide economic returns. Smaller field resources, a high cost base and the reliance on what had worked in the previous high growth phase were all symptoms of an industry not facing up to this new reality. Looking forward this will be a grave mistake for the industry since if we do not move more rapidly this time much of the valuable infrastructure will be gone and even the most innovative approaches will be of little use in capturing the undeveloped prize, offshore the UK.
Dr Peter Smith has experience with BP, leading work in BP Research to develop novel reservoir engineering methods before becoming the founding Director of the BP research Institute at Cambridge University. He returned to BP, leading BP’s environmental technology as Technology VP. He was then seconded to lead the development of a new research engineering University in Trinidad as Associate Provost and Professor of Petroleum Engineering.
In 2008, he founded consultancy ReganSmith Associates and has worked for RPS Energy, Decision Risk Management (DRM) and was laterly appointed Chief Reservoir Engineer for Nautilus, part of RPS Training, to lead the development of the European engineering training program. In 2016 Pete became CEng FEI Chartered Petroleum Engineer with the Energy Institute.
Devex is on May 18-19 at Aberdeen Exhibition and Conference Centre.
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