Draining The North Sea  

The Independent noted this week that the UK had "the steepest fall in oil production of any country last year, according to a report that will fuel fears of an end of the era of North Sea oil revenues" (estimated to be 17% over 12 months).

Kjell Aleklett of the ASPO recently posted a graph from the UK Department of Trade and Industry showing the likely trajectory of UK oil and gas production. Which makes it easy to guess why Tony Blair was so keen to join the US in Iraq.

For several years now, Members of ASPO have presented predictions showing, amongst other things, that the production of oil and gas in the UK sector of the North Sea will occupy no more than a few pages in the history books. This is now confirmed by the UK Department of Trade and Industry that recently published a plot showing that by the year 2020 it is more or less all over.

The UK government is now threatening to revoke exploration licences for mature North Sea oil fields if companies fail to develop their assets quickly enough - which should help to hasten their depletion.

Vital Trivia also has a good analysis of the situation up.

The UK has already peaked. The rate of oil extraction from the UK portion of the North Sea is now in decline after peaking at 3.1 million barrels per day in 1999. The extraction rate today stands at 1.9 million barrels per day, almost 40% down from the peak of just six years earlier.

17% per year is an incredible rate of decline and testament to the advanced extraction techniques employed in the North Sea from day one. Large scale production in the North Sea didn’t start until the early Eighties, the North Sea’s cold, windy climate and the then great depths required sophisticated offshore technology and large upfront capital costs. Due to this high capital cost and relatively high interest rates at the time extraction rates were maximised rapidly to pay off the investment as soon as possible.

As has been seen around the world the use of advanced recovery technology doesn’t generally increase the ultimate recoverable reserves but does increase the recovery rate. Extracting the same amount of oil in a shorter period of time results in a rapid increase at first, a high peak rate of extraction before declining rapidly. We are now seeing this rapid rate of decline in the UK.

This rate of decline, if it were to continue, will result in production falling to 20% of the 1999 peak in just seven years.

There is also more talk arising in the UK about using old offshore oil fields for carbon sequestration.

The British government has announced a plan to develop ways of scrubbing carbon dioxide from the emissions of coal and gas-fired power stations and pumping it beneath the seabed to reduce the impact of fossil fuels on the climate. The greenhouse gas would be stored in depleted North Sea oil and gas fields within ten years.

Carbon capture, also called sequestration, involves passing flue gases from power stations through chemical solvents to remove the carbon dioxide. The gas is then compressed to liquify it, and sent by pipeline to oil or gas rigs. There, it is pumped underground into strata once filled with the fossil fuels.

If the schemes prove successful, they could reduce greenhouse emissions from power stations by up to 85 per cent.

Norway has been running a pilot sequestration project since 1996 in which more than a million tonnes of carbon dioxide have been pumped into empty oil strata in stable and sustainable fashion.

Given that Norway seems to have abandoned that particular idea, its hard to come up with a non-cynical reason for this being raised as an option again.

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