In this final part of our thumbnail sketch of the North Sea, it falls to me to try to paint a picture of the future. So I raked around my desk drawer for the bag of rune stones that I keep especially for such occasions, gave them a rattle and scattered them on the floor.
The first thing to make clear is that, though the North Sea is in decline, it is far from game over, as many people – especially politicians from the Deep South of Englandshire – would have us believe.
The sector remains vibrant, a fact attested to by two reports researched on behalf of Oil & Gas UK and published this week. The supply chain alone is worth around £35billion a year, of which more than 40% is being generated overseas. And the prognosis is good.
And there’s enough confidence among at least some operators that they have been willing to participate in OGUK’s “Rejuvenation” work group chaired by Peter Jones of Taqa Bratani.
At an industry breakfast last winter, he talked about an emerging paradigm shift and of the creation of “enhanced area stewardship” and of increasing “the size of the pie” across 51 key asset clusters.
“We’ve seen tremendous momentum built; this is an opportunity to make a difference; a step change in terms of where we are going. Lying dead in the water and doing nothing is not an option.”
Having experienced 20 years of “Oh good grief we must get our collective acts together if the North Sea is to survive”, one could be forgiven for being cynical about the current workgroups, or indeed of the Wood Report, the findings and recommendations of which are publicly being broadly welcomed and some at least already being implemented.
If they are not, then the days of many of the 51 key asset clusters are numbered. Bearing in mind that they account for 80% of current UK oil and gas production; also 80% of the production losses that need sorting out. With UKCS recovery rates averaging around the mid-40s, there is also much to be gained if another 5% or more can be wrested from ageing reservoirs.
Fortunately the UK is truly in the midst of what I have come to refer to as an “Indian Summer” of sizeable projects that are predicted to deliver a temporary lift in production. These are really stretching the supply chain, as evidenced by cost inflation.
The fact that Statoil chose to put the brakes on Bressay and that development of the Chevron-operated Rosebank project is under the microscope is no bad thing. That helps to take the pressure off and perhaps helps ease price inflation.
Such delays do something else too. Once the current crop of big projects – Clair Phase II, Mariner, Quad 204 (Schiehallion redevelopment), Cygnus, Golden Eagle, Catcher and various others – are completed over the next three or so years, the table starts to look rather bare, so they will help to spin out the impression of prosperity.
There is a hopper of mostly small prior discoveries for operators to try to make an economic go of, but exploration drilling is running at a desperately low level, thus weakening the chances of medium to large oil and gas discoveries being made.
So, after 2017 – and it’s in the forecasts anyway – it looks as if things will fall off a cliff.
But the North Sea has been there before and come through crises, so perhaps at least one more cycle of prosperity lies ahead. I hope so.