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Southern North Sea back on the map for explorers

Lower costs and new initiatives rekindle interest in the mature region but more drilling urged to maintain gas output

There are signs that efforts to foster more exploration in the southern North Sea (SNS), the region where the UK’s exploration and production quest began more than half a century ago, are starting to pay off.

That was the message at the recent NorEx conference in Norwich, a first-time gathering organised by the Oil & Gas Authority (OGA) and held alongside the East of England Energy Group trade body’s annual Southern North Sea conference.

NorEx aimed to raise the profile of current drilling and to guide explorers towards new opportunities, says Eric Marston, the OGA’s SNS area manager.

In its 50-year history, the SNS has produced more than 50 trillion cubic feet of gas, and while production has been in decline, the region continues to deliver about 40% of total UK continental shelf gas production and meet 20% of the UK’s gas demand.

Thanks to successful efforts by industry to bring costs down and keen promotion by the OGA, including the release of new seismic data, the future of the SNS looks more promising than it did even a few years ago, particularly on the exploration front.

Challenges and opportunities

Marston says: “When we first conceived the idea of an exploration conference about six months ago, people asked, why would you want to have an exploration conference in Norfolk? Many explorers follow an international conference circuit, with venues such as Perth, Paris, Calgary and Rio... but Norwich??

“I was heartened to see so many people attend," he says. "If you read some of the press, it says the southern North Sea is ultra-mature, there’s no potential left. I think you will see it’s far from the truth. Yes, there are challenges, but there are also opportunities.”

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The OGA now estimates there are almost 8 Tcf of mean prospective resources remaining in the SNS, in addition to the significant volumes in marginal discoveries, producing fields and proposed new developments.

However, time is of the essence, Marston points out. Many key platforms and pipelines that could play crucial roles in developing remaining hydrocarbon resources are approaching the end of their economic lives.

The OGA is keen to encourage exploration and appraisal activity before such critical infrastructure is taken out of service, leaving otherwise economically viable resources stranded.

A number of exciting new exploration and appraisal wells are either in progress or being planned. Perhaps surprisingly, this includes some by big names such as Eni and Shell.

One of the more interesting stories this year has been Shell’s return to exploration in the region following a deal to enter junior company Cluff Natural Resources’ frontier Zechstein reef play by farming in to two licences and taking over as operator in the north of the basin, outside its usual heartland.

Pensacola programme

Shell agreed in February to acquire a 70% working interest in licence P2252 in return for covering costs of exploration work on the 560 billion cubic feet Pensacola prospect.

In April, it exercised an option to acquire a 50% working interest in licence P2437 — home to the 291 Bcf Selene prospect.

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Robert Konert, a Shell petroleum geoscientist based in Assen in the Netherlands, told delegates to NorEx: “Shell is back in the southern North Sea exploring and that is great. Our strategy in this area... is to strengthen, it is to reshape, it is to high-grade the southern North Sea portfolio.”

Konert called Selene, just north of the Clipper hub, where Shell operates the Barque facilities, a “high-value, near-field exploration opportunity for asset optimisation”.

Pensacola, meanwhile, he called a “standalone material opportunity”.

Another prospect due to be drilled this year is Aspen, operated Italian major Eni, which will carry out the drilling in partnership with Total to test a frontier Lower Carboniferous carbonate play.

The French supermajor recently farmed in to licences P1964, P1965 & P2443, where Aspen is located, acquiring a 40% interest from Eni, which itself acquired its original interests as a result of the acquisition of Jetex UK’s UK licences around 2015.

Larger players

Few other details, however, have been revealed by Eni, whose focus has more recently been at the other end of the oil and gas life-cycle — decommissioning at the Hewett field.

Observers are also watching closely the multi-target and potentially play-extending Darach Central-1 well, spudded not long ago on the northern fringes of the basin by Netherlands-based operator ONE-Dyas and partners Neptune Energy and Spirit Energy.

The Block 42/04-1 well has a main Lower Carboniferous target.

The jack-up Ensco 121 began drilling in late May and results could be available early in September.

Dave Moseley, north-west Europe reports manager at consultancy Westwood Global Energy said, says: “The maturity of the basin has meant that recent exploration has focused on small, near-field targets.

“The slow pace of drilling, with only six wells drilled since 2014, means the discovery of new resources had all but ceased, with only about 150 billion cubic feet of commercial resources discovered by these wells.”

However, for future exploration to have any impact, companies will have to be prepared to take more risk, he says.

“And this is what we are seeing in the next 12 to 18 months with three high-risk, high-impact wells in the offing,” he says.

Moseley says it is “surprising” that three supermajors are participating in two of these wells but adds: “The prominence of larger companies in the upcoming high-impact wells suggests they see material follow up in the event of success.”

Increasing the pace

He adds: “If the SNS is to continue to contribute a large proportion of the UK's indigenous gas supplies there will need to be an increase in drilling pace. In the case of near-field exploration, timing will be key, so that future resource volumes can be progressed before tie-back options dry up.”

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