Statoil's ray of North Sea sunshine
The Verbier discovery is undoubtedly a welcome boost for the UK oil industry, but plenty more like it will be needed to arrest the region’s decline
Statoil's discovery of at least 25m recoverable barrels of oil close to the Scottish coast is a fillip for the UK's North Sea industry and the company says it now has confidence to push ahead with its exploration campaign.
Preliminary results suggesting the discovery in the Verbier sidetrack well in the outer Moray Firth could yield anywhere from 25-130m barrels of oil will need to be firmed up with more drilling, before Statoil—which owns a 70% stake in the project alongside its partners Jersey Oil (18%) and CIECO (12%)—can take any decisions on its commerciality.
Statoil said the decision vindicated its decision to drill a sidetrack well after the main Verbier well had encountered a water-filled sand. Jenny Morris, Statoil's vice president for UK exploration, said the discovery "proves that there could be significant remaining potential in this mature basin".
However, the company also announced two other wells it drilled recently in the UK North Sea yielded poor results—one was dry and the other had non-commercial amounts of oil. Its exploration in the Norwegian Barents Sea has also been disappointing of late. Statoil's final well of its 2017 campaign in the area, the Koigen Central wildcat, which lies 100km off the Johan Castberg development, failed to find hydrocarbons.
Statoil will continue its push in the Barents Sea next year, with at least five wells reportedly already lined up for the region.
Despite finds such as Verbier—or Hurricane Energy's much bigger Greater Lancaster discovery in the West of Shetland region—recent exploration history in the North Sea has been what one might expect from a fast-maturing field. A pattern of lower strike rates punctuated by the occasional juicy one-off find—all grist to the mill, of course. But nothing to particularly suggest a bright long-term future for the region as a whole.
Researchers at Edinburgh University certainly don't think the UK North Sea has much left to explore. A report published in September by a team led by Professor Roy Thompson, of the university's School of GeoSciences, found that almost 10% of the UK's original recoverable oil and gas remains in UK offshore fields.
"Analysis of hydrocarbon reserves shows that discoveries have consistently lagged behind output since the point of peak oil recovery in the late 1990s. The research predicts that both oil and gas reserves will run out within a decade," the university says.
The research was even more gloomy about the potential for hydraulic fracturing in the UK, suggesting that it was "barely economically feasible", especially in Scotland, because of a lack of sites with suitable geology.
While small-scale exploratory fracking has recently started up after a lengthy hiatus in England, the Scottish government said in early October it was extending its ban on fracking indefinitely.
If the Edinburgh study's findings become reality, the UK will soon have to import all the oil and gas it needs, the researchers say. Their suggested solution is to plough investment into offshore wind and advanced solar energy technologies.
"The UK urgently needs a bold energy transition plan, instead of trusting to dwindling fossil fuel reserves and possible fracking," Thompson said.
The oil companies operating in the North Sea will be hoping that they can prove the doomsayers wrong—but they haven't got long in which to do it.