Intensified cross-border cooperation is anticipated between Norway and the UK, according to speakers at the recent North Sea Beyond 2000 conference in London. As a high-cost mature province facing fierce competition from abroad, the North Sea will have to fight hard to secure its future, confer-ence delegates agreed, and collaboration across the median line could offer interesting new opportunities.
A conference focusing on cooperation issues has also been proposed for 2002, and the two countries will meet annually at governmental level to review progress. There are already regular contacts concerning certain trans-boundary issues, but some of the newly proposed areas for collaboration, such as joint branding of exports, will break new ground.
At the recent London event, Malcolm Brindred, Managing Director of Shell Expro UK, highlighted the key areas of concern:
- Market liberalization
- Harmonization of regulations
- Jointly sponsored R&D and field operations
- Joint branding of exports of goods and services
- Increased use of Norwegian gas to fulfill UK gas import needs.
Helen Liddell, the UK's Energy Minister, cited the key benefit for the UK: securing long-term supplies of gas through the new Vesterled link, which Norsk Hydro is to install between Heimdal and the Norwegian-owned Frigg pipeline to St Fergus, Scotland.
Hydro plans to start sending gas via Vesterled to the UK as early as October 2001. Negotiations between London and Oslo to amend the Frigg treaty to accommodate Vesterled are proceeding well, Liddell reported. Talks also involved the transport of liquids through the existing Heimdal-Brae link, which would further benefit the UK, she claimed.
Technology challenge
Although it is generally acknowledged that the UK sector is more mature than the Norwegian, and hence more experienced in tackling problems such as small-field developments, the technology needs are similar. Also, there is recognition in both countries' research and development programs - Norway's Demo 2000 and the UK's Industry Technology Facilitator - that the focus of such efforts should be demonstrating new technology in "live" situations. It was generally accepted that benefits could accrue from coordinating the two sides' research and development efforts.
To an extent, collaboration across the median line has been underway for some time. Shell's own experience was outlined by David Loughman, formerly Managing Director of Norske Shell and now head of Shell's gas business in the UK. Companies with a foot in both camps have a key role to play in leading the way on cross-border cooperation, he said.
Hydrocarbon provinces are no respecters of national boundaries, and as reserves become more difficult to locate and drill, pooling experience and geological learning across the boundaries should provide a powerful tool in the exploration phase, Loughman said. However, Shell's experience was that this was harder to achieve than it appeared.
For developments, cross-border solutions making use of existing infrastructure could be the key to economic viability. Perhaps the greatest value, Loughman added, will accrue from taking a systematic view of the end-game and working out which combinations of infrastructure might have a significant effect on optimal resource recovery. For example, a $2-3/bbl reduction in breakeven cost could make viable several potential projects with combined 4 billion BOE potential.
Reserves at stake
In the UK Northern North Sea area, consideration had been given to using Shell's Brent infrastructure to tie back the Statoil-operated Kvitebj rn development, though a purely Nor-wegian solution was eventually chosen. Shell is currently evaluating whether its marginal Penguin cluster of fields on the UKCS could be developed using facilities on the Norwegian side.
The split in the northern area shows considerable reserves and scope for additional recovery, particularly for gas. The bulk of non-contract gas, some 150 bcm, lies on the Norwegian side, though there is 1 billion bbl of remaining mobile gas in the area. Cross-border pipeline capacity is, however, very limited, consisting of a single (at present unused) 12-in gas line connecting Statfjord to the Flags system.
Experiences have been shared between Statoil's Statfjord and Shell Expro's Brent assets, initially aimed at seeking lessons from Brent's decline, which could be useful for Statfjord. Both sides have advanced knowledge. While the Statfjord side has picked up on Shell methodologies for chasing small targets, the Brent team has benefited from Statoil's successes with 4D seismic and work on gas injection.
Specific fields
Joint discussion topics have included well technologies for mature fields and operational costs. Healthy competition has emerged between the two assets, which are both competing to supply power to Shell's Dunlin Field in the UK sector.
Another option being evaluated is to apply experience of depressurization at Brent to Statfjord, to enable substantial additional gas to be produced and field life extended. Statfjord's processing and compression facilities would have to be refurbished to deal with the low pressures. It could prove more attractive to use the facilities on Brent, as these have already been upgraded and could handle the entire Statfjord volume.
Cross-border cooperation would be greatly aided by regulatory convergence, Loughman said. The regulatory framework is part of the "mental map"of those involved in this area, and doing away with the need to deal with different regulations could release welcome energy for interaction and exploring new ideas.
