5Tcf undeveloped in SNS

Mar 5, 2014

Some 5Tcf of natural gas reserves are sitting undeveloped in the Southern North Sea, an event on the basin heard today (5 March).

John Westwood, of industry analysts Douglas Westwood, was speaking at the Southern North Sea 2014 conference in Norwich, UK, and addressing some of the findings from the recently announced Wood Review.

He said that there are 102 undeveloped discoveries in the UK Southern North Sea at the moment. This amounts to 5Tcf of undeveloped reserves.

"Admittedly, they are small," he said, adding: "Another way if looking at it is there are 466 un-drilled prospects in the Southern North Sea. "So what do we do to access these?"

Part of the problem is that the Southern North Sea has different economics to the rest of the North Sea, being predominantly gas and having a high level of maturity.

But, in comparison to the Dutch sector, brownfield investment is low, Westwood says, despite the retention of infrastructure with which smaller fields could be developed through, being a key issue.

The tax regime in the UK doesn't help, he said. It is 2.5x more profitable, post tax, for comparable developments in the UK, compared to the Netherlands.

"This is all about Treasury and the Department of Energy and Climate Change," Westwood says. "The big issue is fiscal, but the Wood Review did not consider this in great depth."

The Wood Review has proposed specific measures for the Southern North Sea. Westwood says addressing its fiscal regime will be crucial.

"Our view is that we are going to see a secondary peak in production around 2017, because of recent investments in fields developments (record spending in 2013), but unless action is taken it will decline.

"We have a situation the UK where there are a great number of fields, however, production peaked in 1999/2000 and has been going down since," he said.

Further, in 2000, 11% of the global offshore production wells drilled were on the UK Continental Shelf. Yet, in 2013, that had fallen to 5%, says Westwood.

But, there is still a lot to play for, he says - some 30-40% more than what has been produced to date could be developed.