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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.

Brent crude is still used today as a standard benchmark for pricing oil, although the contract now refers to a blend of oils from fields in the northern North Sea.

Contents 1 History 1.1 1851-1963 1.2 1964-2008 2 Licensing 3 Reserves and production 4 See also 5 External links 6 References

History

1851-1963

Commercial extraction of oil on the shores of the North Sea dates back to 1851, when James Young retorted oil from torbanite (boghead coal, or oil shale) mined in the Midland Valley of Scotland.^[1] Across the sea in Germany, oil was found in the Wietze field near Hanover in 1859, leading to the discovery of 70 more fields, mostly in Lower Cretaceous and Jurassic reservoirs, producing a combined total of around 8000 barrels per day.^[1]

Gas was found by chance in a water well near Hamburg in 1910, leading to minor gas discoveries in Zechstein dolomites elsewhere in Germany.^[1] In England, BP discovered gas in similar reservoirs in the Eskdale anticline in 1938, and in 1939 they found commercial oil in Carboniferous rocks at Eakring in Nottinghamshire.^[1] Discoveries elsewhere in the East Midlands lifted production to 2500 barrels per day, and a second wave of exploration from 1953 to 1961 found the Gainsborough field and 10 smaller fields.^[1]

The Netherlands' first oil shows were seen in a drilling demonstration at De Mient during the 1938 World Petroleum Congress at The Hague.^[1] Subsequent exploration led to the 1943 discovery by Exploratie Nederland, part of the Royal Dutch/Shell company Bataafsche Petroleum Maatschappij, of oil under the Dutch village of Schoonebeek, near the German border.^[2] NAM found the Netherlands' first gas in Zechstein carbonates at Coevorden in 1948.^[2] 1952 saw the first exploration well in the province of Groningen, Haren-1, which was the first to penetrate the Lower Permian Rotliegendes sandstone that is the main reservoir for the gas fields of the southern North Sea, although in Haren-1 it contained only water.^[3] The Ten Boer well failed to reach target depth for technical reasons, but was completed as a minor gas producer from the Zechstein carbonates.^[3] The Slochteren-1 well found gas in the Rotliegendes in 1959,^[3] although the full extent of what became known as the Groningen field was not appreciated until 1963 - it is currently estimated at ~96tcf (2.7×10¹² m³) recoverable gas reserves.^[2] Smaller discoveries to the west of Groningen followed.

1964-2008

Following this success, exploration of the similar rocks offshore was a natural progression. Licensing regulations for Dutch waters were not finalised until 1967, but the UK Continental Shelf Act came into force in May 1964, setting the scene for seismic exploration and the first well later that year. It and a second well on the Mid North Sea High were dry, as the Rotliegendes was absent, but BP's Sea Gem rig struck gas in the West Sole field in September 1965.^[4] The celebrations were short-lived because the Sea Gem sank with the loss of 13 lives after part of the rig collapsed as it was moved away from the discovery well.^[4] Larger gas finds followed in 1966 - Leman Bank, Indefatigable and Hewett, but by 1968 companies had lost interest in further exploration of the British sector, a result of a ban on gas exports and low prices offered by the only buyer, British Gas.^[4] West Sole came onstream in May 1967.^[4]

The situation was transformed in December 1969, when Phillips Petroleum discovered oil in Chalk of Danian age at Ekofisk, in Norwegian waters in the central North Sea.^[4] The same month, Amoco discovered the Montrose field about 135 miles east of Aberdeen.^[4] BP had been awarded several licences in the area in the second licensing round late in 1965, but had been reluctant to work on them.^[4] The discovery of Ekofisk prompted them to drill what turned out to be a dry hole in May 1970, followed by the discovery of the giant Forties oilfield in October 1970.^[4] The following year, Shell Expro discovered the giant Brent oilfield in the northern North Sea east of Shetland. Oil production started from the Argyll field (now Ardmore) in June 1975^[5] followed by Forties in November of that year.^[6]

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 NASA's budget to land a man on the moon. ^[7] 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).^{[citation needed]}

The largest field discovered in the past 25 years is Buzzard, found in June 2001 with producible reserves of almost 400m barrels and an average output of 180,000-190,000 barrels per day^[8]. While significant, this is less than the amount of oil consumed globally in a single week.^[9]

Licensing

Five countries are involved in oil production in North Sea. 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 Department for Business, Enterprise and Regulatory Reform (BERR - formerly the Department of Trade and Industry). 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. 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 government has actively solicited new entrants to the UKCS via "Promote" licensing rounds with less demanding terms and the fallow acreage initiative, where non-active licences have 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.^[10] More than half of the North Sea oil reserves have been extracted, according to official sources in both Norway and the UK. For Norway, the NPD ^[11] gives 4601 million cubic meters (corresponding to 29 billion barrels) for the Norwegian north sea alone (excluding smaller reserves in Norwegian sea and Barents Sea) ultimate of which 2778 (60%) already produced to January 2007. UK sources gives a range of reserve estimate, but even using the "maximum" estimate of ultimate recovery, 70% have been recovered at end 2006^[12]. Note the UK figure includes fields which are not in the North Sea (onshore, West of Shetland).

United Kingdom Continental Shelf production was 137.1 x 10⁶ tonnes of oil and 105 bcm of gas in 1999.^[13] (1 tonne of crude oil converts to 7.5 barrels.^[13][14][15] The Danish explorations of Cenozoic stratigraphy, undertaken in the 1990s, showed petroleum rich reserves in the northern Danish sector, especially the Central Graben area.^[16] The Dutch area of the North Sea followed through with onshore and offshore gas exploration, and well creation.^[17][18]

Exact figures are debatable, because methods of estimating reserves vary and it is often difficult to forecast future discoveries.

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, although British gas production is in sharp decline ^[19].

UK oil production has seen two peaks, in the mid 1980s and late 1990s, with a decline to around 1.9 million barrels in the early 1990s.^[20] Monthly oil production peaked at 84.9 million barrels in January 1985^[20] although the highest annual production was seen in 1999, with offshore oil production in that year of 2.559 million barrels per day^[21] and had declined to 1.452 million barrels in 2007.^[21] 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.^[22] The production is expected to fall to one-third of its peak by 2020.^{[citation needed]}

See also

• List of oil and gas fields of the North Sea
• List of oil fields
• Oil fields in Norway
• Economy of Norway
• Economy of the United Kingdom
• Geology of the United Kingdom
• United Kingdom Climate Change Programme
• Energy use and conservation in the United Kingdom
• Economy of Scotland
• Oil platform
• Proposed oil phase-out in Sweden
• Subsea

External links

• North Sea oil at the (US) Energy Information Administration
• UK Department for Business, Enterprise & Regulatory Reform
• Danish North Sea oil and gas production, Danish Energy Authority
• OLF Norwegian Operators association
• United Kingdom Offshore Operators Association
• Petroleum Exploration Society of Great Britain
• The OilCity Project, stories and anecodotes from people involved in the North Sea Oil & Gas industry.
• Interactive Map over the Norwegian Continental Shelf, live information, facts, pictures and videos.
• Oil and the City Aberdeen's relationship with the oil industry.

References

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