Skip to main content

North Sea Oil's time is over - let the lame duck die!


North Sea Oil is a dying duck - and TNW won't change that. Let the damn thing die.

In September last year, oil industry trade association Oil & Gas UK warned that production in the North Sea has been in a state of long-term decline and that low oil prices may very well push investment off a cliff. Its report projected a fall in capital investment of £2 to £4 billion in each of the next three years, down from £14.8 billion invested in North Sea oil in 2014.

One of the reasons for this is that operating costs have increased by 12 percent on a CAGR between 2004 and 2013 while supply chain costs have also climbed. Furthermore, the North Sea has only achieved an average production of 55 million barrels of oil equivalent from newly discovered recoverable reserves over the past three years, the lowest level since the UK first opened its continental shelf decades ago.

Interest in the North Sea is disappearing, as indicated by the lack of success experienced by Russian billionnaire Mikhail Fridman to unload his North Sea assets. Oil production from the North Sea is now below 1 million barrels per day and there simply isn't enough new discoveries being made for the region to recover substantially.

More recently, Oil & Gas UK has noted a slight recovery, in that up to 590 million barrels of oil and gas may have been extracted last year. However, this is likely due to the 'lag effect' in investment, according to Brendan Warn, senior oil and gas analyst BMO Capital Markets, meaning that the new wells, such as the Taqa 10,000-barrel-a-day Cladhan field off Shetland, would have been approved back when oil was above $100. On this basis, Mr Warn predicts that news from the North Sea over the period 2017-20 will be "horrendous".

Statoil has scrapped the equivalent of four years of drilling by one rig over the past 18 months, according to data from its company filings, and in November 2015, Nordea Markets said that before too long there will be a "rig graveyeard" in the area.

So how on earth does The New Way (TNW) thinks it can turn the North Sea around? Well intervention is costly, heavy intervention for example requires the construction of a new rig in order to remove and reinstall the wellhead, that in turn incurs costs of manning and maintaining a high spec rig. However, it could use riserless light well intervention and it is considering the use of a Mini Coil.

Even so, only 10 percent of the oil already being produced was discovered in new fields between 2012-2014. In other words, the North Sea is a dying duck as far as oil is concerned. In fact, the North Sea oil crisis is so bad it is starting to adversely affect the UK economy (along with all the other factors we already know about such as having a moronic Tory government that refuses to recognise that austerity doesn't work).

So why bother at all? In fact, there is a greater issue to tackle anyway - climate change. At present, we are on course for 5 degrees C global average temperature by the end of the century, which is insane given that 2 degrees C is bad enough already (the maximum temperature recommended as a means of avoiding truly calamitous global warming).

It would make much more sense to plough even more investment into renewables, which has already overtaken investment in North Sea oil with £15.2 billion invested in renewable energy last year, according to Bloomberg North Sea Finance (BNEF). The sensible thing to do would therefore be to start decommissioning the North Sea, so that the UK can concentrate on developing renewable energy.  We have the chance now to start doing that, and we can prepare for it by transitioning oil workers over to employment in clean energy.

In other words, forget it - let the damn thing die, as indeed it should. If not, well to those who are concerned about climate change (rather than those who obviously don't give a monkeys) there is an old saying:






Need I really say more?





Comments

Popular posts from this blog

The Battle of the Blogs? Whitlock goes to War...

Good day folks, you're all in for a bit of a treat as it happens, so I hope you're sitting comfortably. Before I go any further, I should issue a 'long read' warning. This blog piece is going to be fairly long, quite involved in its detail, but hopefully very enjoyable if you despise and detest climate change denial, as I do. But first, an explanation of the circumstances.

The other day, on Twitter, I indulged in a bit of regular fun-poking at James Delingpole, as I often do because, quite simply, the man just invites it. For those not in the know, Delingpole is a pretty nasty character really. He writes regular blog pieces and op-eds for Breitbart and The Spectator, usually on climate change, but also on other subjects as well. He is usually, and seemingly, unashamedly vicious, as will become apparent in my coverage of him and his behaviour in this piece. Given his behaviour, I am not afraid, occasionally to indulge in a bit of 'ad-hominem' warfare myself, ind…

Array Technologies leads US market in solar tracker shipments

5 Companies and Their Efforts to Reduce the Environmental Impact of Manufacturing

By Rana Tarakji
The Industrial Revolution has undoubtedly affected the environment. From pollution to global warming, the environment has taken on a lot of the burden for many of the advancements that humans have enjoyed.
Unfortunately, the manufacturing industry is one of the biggest contributors to the significant damages and hazards on the environment. Manufacturing companies are among the biggest producers of solid, liquid, and gaseous wastes that lead to huge levels of pollution.
Although many manufacturing companies still do not have policies and practices in place to reduce their negative impact on the environment, there are many who are taking the lead to a more sustainable and environment-friendly approach.
Coca Cola When it comes to beverage manufacturers, Coca Cola is among the biggest around the world. They have started taking on a more responsible environmental commitment by making water preservation, sustainable packaging, and energy and climate protection among their goals.…