Credit: Allister Thomas, Energy Voice
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It was only last year that exploration drilling hit rock bottom in the UK sector with just eight wells drilled, the lowest level since the 1960s. However, late-2018 and early-2019 brought two large discoveries – Glengorm and Glendronach – which have made firms look again at the region, Nick Richardson said. He said: “It always helps when you’ve had a couple of big discoveries under your belt. I think they’ve served as a beacon to the rest of the industry that now companies have started to sit up and look at the North Sea again. They see that what was previously written off as a mature basin actually does have some big, impactful potential still sitting there.”
Jon Gluyas, a founder of Acorn Oil and Gas and Fairfield Energy, believes there is a wrongly held perception among geologists that a field’s performance is mainly determined by technical aspects, rather than company decisions.
Mr Gluyas, now head of Durham University’s Energy Institute, is advising Bridge Petroleum on Galapagos, a huge redevelopment of the North West Hutton and Darwin fields east of Shetland, thought to have around 900million barrels still in place.
North West Hutton changed hands several times over the years, including with Fairfield, and encountered a number of issues, including a material called barium which effectively “stuffed” the reservoir. Commercial decisions, such as a previous operator realising their mistake but not paying to rectify it, had a hand to play in its chequered past but Mr Gluyas believes the time could be right for Bridge to make it a success.
He said: “They’re approaching it in an extremely systematic way and I think if anyone’s going to make this work now is the time, with all the knowledge that’s been built up over the last 30 or 40 years developing in what is essentially a tight oil reservoir. A key point is there is a perception amongst geologists, geophysicists and reservoir engineers that the technical aspects of a field – the geometry, the quality or not of the rock, the viscosity of the oil – are complete determinants to the way a field performs. And they’re not.”
Glendronach, discovered west of Shetland in September by Total was, at the time, the biggest find in a decade. It could produce 175 million barrels of oil equivalent. It was then surpassed by Cnooc’s Glengorm discovery in the central North Sea, with potential for up to 250m barrels.
From an exploration perspective, they represent two very different prospects. Mr Richardson said: “Glengorm is something that has been sitting there and known about as a prospect for a long time, about 15 years. It has been through a number of hands in terms of different operators. A challenging well, but it finally got drilled and they could see there’s potential for a sizable discovery there.
“Glendronach on the other hand only came onto our radar relatively recently. Total had it mapped as a kind of concept and it was very rapidly put onto their drilling schedule. They drilled it and it looks very promising indeed, not just on its own but in terms of the potential for similar types of discovery that could be along that trend. The North Sea is great because it can encompass lots of different business strategies. You can be a relatively small company chasing undeveloped discoveries, a mid-sized company with producing assets or a larger operator where you need something that really does make an impact in terms of your global portfolio. These discoveries are particularly important from that perspective.”
These big finds come at a good time for the OGA. The regulator is on the verge of announcing its awards for the 31st licensing round, which focuses on frontier areas, and that’s ahead of launching the 32nd round later this year for mature regions. Mr Richardson said the 31st round has proved more popular than its last auction for frontier areas awarded in 2017. Along with the 31st has come a supplementary round for the Greater Buchan Area in the outer Moray Firth.
The region had some disappointment recently, when Equinor, Jersey Oil and Gas and Cieco found out that their Verbier discovery holds just 25m barrels of oil equivalent. They had been hoping for well over 100m barrels. Despite this setback, the OGA sees the area’s potential through a holistic approach.
Mr Richardson said: “We’re evaluating the applications and will make the awards as soon as possible. It’s certainly an area that we have high hopes for with Buchan as a hub and then the surrounding prospectivity and discoveries tied into it. I think this is the first step in a longer journey. It has demonstrated to us the value of taking areas thematically. Us doing some work, saying ‘this is our view as the OGA’ and then how we can then get industry to best act upon what we or they think should be done to maximise the potential in a particular area. I think industry can expect that in the future we might do similar types of things, maybe not as discrete rounds that exist within licensing rounds and say this is something we want to be tackled holistically.”
Drumming up interest and extracting value from mature areas has its own set of challenges which the OGA will need to contend with for the 32nd round. To do so, it is providing a suite of products with vast sums of information on the licences on offer across the UK sector, such as rock physics studies, a geochemical database and a “megamerge” with 23,000 square kilometres of seismic data on the southern North Sea.
Putting the data into new hands will bring new possibilities, according to Mr Richardson. He said: “I’m constantly surprised when you’ve got two different teams looking at the same area, and working independently they can come up with different ideas. By broadening the access to the data, you get that breadth of knowledge and experience which can bring out new ideas and concepts which can be exploited. By getting someone else to look at it you will find something different. It’s an interpretation, there’s no single version of the truth, and it very much depends on the individual scientist. The early wells on NW Hutton were good, but the last few did nothing at all because they basically stuffed the reservoir. The new programme needs to avoid some of those damaged areas.”
One of the ways that is best evidenced is through the life of the Argyll field – the first to produce oil in the North Sea – which has been redeveloped twice. Mr Gluyas’ firm Acorn Oil and Gas became the first company to ever redevelop a North Sea field when it picked up the licence for Argyll in 2002, which had been abandoned more a decade earlier. It would later be redeveloped again by EnQuest under a new name, Alma, which is still producing today. This was all possible due to the Hamilton Brothers, who won the race to produce the first North Sea field in 1975, abandoning it prematurely in pursuit of prospects elsewhere like Vietnam.
Another example is in Murchison, an oilfield where production peaked and troughed in line with the priorities of the firm who owned it at a given time. Mr Gluyas believes there are still opportunities in many regions of the North Sea, but it may mean more expensive methods.
He added: “There are opportunities everywhere. From something like Lyle with five percent recovery in a really difficult reservoir, maybe up to some of the best-performing fields if you can install things like C02 enhanced oil recovery. It’s down to decisions in companies. Changes in strategy, the desire to move a production vessel from the North Sea to Vietnam, which then determines to a larger extent, I think than the technical aspects, how a field performs or whether or not it is worth redeveloping.”