North Sea oil

North Sea oil refers to oil and natural gas ( hydrocarbons) produced from oil reservoirs beneath the North Sea. In the oil industry, "North Sea" often refers to a larger geographical set, including areas such as the Norwegian Sea and the UK "Atlantic Margin" (west of Shetland) not, strictly speaking, part of the North Sea.

History

North Sea oil was discovered in the early 1960s, with the first well coming on line in 1971 and being piped ashore at Teesside, England, from 1975, but the fields were not intensively exploited until rising oil prices in the 1980s made exploitation economically feasible. Volatile weather conditions in Europe's North Sea have made drilling particularly hazardous, claiming many lives. The conditions also make extraction a costly process, by the 1980s costs for developing new methods and technologies to make the process both efficient and safe, far exceeded NASAs budget to land a man on the moon. In reality, oil seeps had been known from coal beds on either side of the North Sea, but only a limited amount of development had occurred ( Eakring oil field, Nottinghamshire, England; Edinburgh Oil Shales (which seem unrelated to later discoveries); and small discoveries in the Netherlands and Northern Germany). A "demonstration well" was sunk in 1938 in association with the World Petroleum Congress at The Hague. After the Second World War a small number of onshore gas and oil fields were found in 1959, an academic well drilled at Ten Boer near Groningen, Netherlands was deepened and discovered a significant gas deposit. Appraisal and development wells over the next few years brought the realisation in 1963 that the Groningen field was not just "economic", nor even "big", or "large", or "giant", but was an "elephant" field of huge potential. Given that, extending exploration into adjacent areas was an obvious decision.

The exploration of the North Sea has been a story of continually pushing the edges of the technology of exploitation (in terms of what can be produced) and later the technologies of discovery and evaluation ( 2-D seismic, followed by 3-D and 4-D seismic; sub-salt seismic; immersive display and analysis suites and supercomputing to handle the flood of computation required).

Licensing

There are five countries with North Sea Production. All operate a tax and Royalty licensing regime. The respective sectors are divided by median lines agreed in the late 1960s:

• United Kingdom - licences are administered by the DTI ( Department of Trade and Industry- Website). The UKCS (United Kingdom Continental Shelf) is divided into quadrants of 1 degree latitude and one degree longitude. Each quadrant is divided into 30 blocks measuring 10 minutes of latitude and 12 minutes of longitude. Some blocks are divided further into part blocks where some areas are relinquished by previous licensees. For example block 13/24a is located in quad 13 and is the 24th block and is the a part block of this block. The UK government has traditionally issued licences via periodic (now annual) licensing rounds. Blocks are awarded on the basis of the work programme bid by the participants. The UK DTI has been very active in attracting new entrants to the UKCS via Promote licensing rounds (less demanding terms) and the fallow acarage initiative where non-active licences have had to be relinquished.
• Norway - licences are administered by the NPD (Norwegian Petroleum Directorate Website in English ). The NCS is also divided into quads of 1 degree by 1 degree. Norwegian licence blocks are larger than British blocks, being 15 minutes of latitude by 20 minutes of longitude (12 blocks in a quad). Like Britain there are numerous part blocks formed by relicensing relinquished land.
• Denmark - The Danish sector is administered by the Danish Energy Authority ( website in English). The Danes also divide their sector of the North Sea into 1 degree by 1 degree quadrants, their blocks however are 10 minutes latitude by 15 minutes longitude. Part blocks exist where partial relinquishments have taken place.
• Germany - Germany and the Netherlands share a quadrant and block grid - quadrants are given letters rather than numbers. The blocks are 10 minutes latitude by 20 minutes longitude. Germany has the smallest sector in the North Sea.
• Netherlands - The Dutch sector is located in the Southern Gas Basin and shares a grid pattern with Germany.

Reserves and production

The British and Norwegian sections hold most of the remainder of the large oil reserves. Estimates say that in the Norwegian section alone lie 54% of the sea's oil reserves and 45% of its gas reserves. About half of the North Sea oil reserves have been extracted, although exact figures are debatable due to the nature of estimating oil reserves.

Most oil companies have investments in the North Sea. Peaking in 1999, production of North Sea oil was nearly 6 million barrels (950,000 m³) per day. Natural gas production was nearly 10 trillion cubic feet (280,000,000,000 m³) in 2001 and continues to increase.

Brent crude (one of the earliest crude oils produced in the North Sea) is still used today as a standard reference for pricing oil.

North Sea oil production fell ten percent (230,000 barrels) in 2004, and fell an additional 12.8% in 2005. This was the largest decrease of any other oil exporting nation in the world, and has led to Britain becoming a net importer of crude for the first time in decades, as recognized by the energy policy of the United Kingdom. . The production is expected to fall to one-third of its peak by 2020.

In Spring 1999, a prospected oil field, later named Buzzard, came in as the largest discovered in the past 25 years, with producible reserves of almost 500 million barrels. While significant, this is less than the amount of oil consumed globally in a single week.