Saturday, July 06, 2013
LONDON Britain must get tough with major oil firms that prevent smaller producers from getting access to platforms and pipelines, or risk leaving as much as $500 billion worth of oil in the ground, North Sea oil companies say.
Output from the North Sea has been in steep decline as mature fields are exhausted and global firms such as BP and Shell focus on more promising projects elsewhere. But there is still oil under the sea bed that a host of smaller operators is keen to extract, and Britainâ€™s cash-strapped government is anxious to maximise tax revenues.
The problem is, many small producers lack the infrastructure to get their oil to market and need access to platform hubs and pipelines owned and operated by the big oil companies. And much of that infrastructure is coming to the end of its working life.
Helping small rivals, however, is at best a low priority for oil majors, and at worst unprofitable and not in their interest.
â€œItâ€™s more of a headache than anything else,â€ said Stephane Foucaud, managing director at research and analysis firm First Energy Capital. â€œThey (oil majors) want to exit the North Sea, so dealing with small offtake agreements is not a priority.â€ The industryâ€™s infrastructure code of practice is meant to help smaller players bring new fields onstream that require access to third party platforms and pipelines. That often doesnâ€™t happen, according to industry insiders.
â€œWe look for owners of infrastructure to market it … and use it for the greater good, but there is a variation in that,â€ said Simon Toole, head of licensing exploration and development at Britainâ€™s Department of Energy & Climate Change. Time is running out. By the middle of the next decade, over half of existing North Sea infrastructure will be decommissioned or no longer available for use. Consultants Hannon Westwood estimate some 4.88 billion barrels of oil equivalent (boe) in recoverable reserves, worth some $500 billion, are at risk of being stranded as a result.
â€œDecommissioning has been pushed back but it does need to start happening,â€ said Philip Whittaker, an associate director at the Boston Consulting Group.