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August 2016

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Editorial comment

The North Sea is one of the world’s most mature oil and gas regions, with commercial oil and gas exploration having taken place there in one form or another since 1851. However, it wasn’t until the UK Continental Shelf act came into force in 1964 that the North Sea industry began to take on the shape it has today.

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From the start, operations in the North Sea have been characterised as a struggle against the elements – manpower and technology versus hazardous environments and volatile weather conditions. Many lessons have been learned from operations in the North Sea, with many of them being harshly taught – the Piper Alpha disaster being a prime example. Indeed, the drive to face these challenges and prevent such accidents occurring again has lead the local industry to become a hotbed of technological development and a globally respected source of expertise.

Astonishingly for such a mature basin, the North Sea was the most active drilling region in the world with 173 rigs in operation as recently as January 2015.1 However, the current downturn has been hard on the region, particularly in the UK sector, prompting profit warnings and even tax breaks. For its 29th licensing round, the UK’s Oil and Gas Authority (OGA) has cut rental fees by up to 90% in a drive to attract more investment into the region. And in stark contrast to the still-recent boom, exploration activity is set to fall to the lowest levels seen for 45 years.2 OGA’s chief executive commented on the situation, “We recognise that market conditions are currently very difficult but nevertheless we have a shared goal of making the basin as attractive as possible for exploration.”

There’s no doubt that tough times lie ahead for the North Sea, but there are still advantages and opportunities out there. One example is decommissioning; it’s been a long time coming, but this particular sector could be on the verge of a boom in the North Sea – many platforms in the basin have remained operational far past their intended lifespan, with operators preferring to pay for maintenance rather than shutting down expensive, ageing facilities. With the current low oil price, such extensive maintenance is often no longer affordable. In this issue’s Regional Report (page 10), Douglas-Westwood investigate the future of North Sea decommissioning and look at the opportunities it holds.

The implementation of advanced technologies and the promotion of the ‘Digital Oilfield’ concept will likely also play a major role in the future of the North Sea industry. Oil and gas operations, both onshore and offshore, produce huge amounts of data – capturing and analysing that data in order to improve efficiency, cut unnecessary costs, and increase safety represents a significant opportunity. On page 51 of this issue, Oilfield Technology correspondent, Gordon Cope, takes a look at how the Digital Oilfield could hold the future for the oil and gas industry and asks what more operators could be doing to bring it to fruition.

The North Sea’s immediate future may be difficult but, as I outlined at the start of this comment, the fight against adversity (technical, environmental, economic and otherwise) is one of the basin’s defining features. Some things may need to change, but by showing the same grit, determination and technical expertise that has characterised the region for decades, the future of the North Sea industry can be assured.

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