North Sea continues to hold promising future

The pattern of corporate activity in the North Sea has changed in recent years, reflecting the growing maturity of this province.

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Kjell Ursin-Smith
Offshore Northern Seas

The pattern of corporate activity in the North Sea has changed in recent years, reflecting the growing maturity of this province. The trend began in the UK and is now evident in Norway as companies specializing in older and marginal fields begin to make their mark. A key event was Talisman's recent acquisition of BP's Gyda asset, and similar deals can probably be expected in the future.

Elsewhere in Norwegian waters, a different late-life model is being implemented, with Statoil seeking to optimize production by adopting an area-wide strategy. The area in question is Tampen in the northern North Sea, which encompasses a dozen fields, including Statfjord, Gullfaks, and Snorre. A substantial reconfiguration of production arrangements should be in place by 2007.

Important initiatives have been set in motion with our neighbors across the median line. The Norwegians and the British have learned much from each other over the years, and our relationship is set to become closer as the barriers between the two sectors begin to come down. A new age of cross-border cooperation is being ushered in, as indicated by the recent announcement that the principles of a new gas treaty have been agreed.

The treaty will open the way for new transport links such as Norsk Hydro's Ormen Lange export pipeline, which will allow the UK's emerging need for gas imports to be met in part from Norway's large gas reserves. It also will allow other forms of cooperation, such as cross-border tie-backs that should benefit marginal fields in the border area.

In the latter decades of the 20th century, the North Sea established a reputation as a hotbed of technology development, a tradition we are keen to maintain. New technology is needed, not just to produce marginal and aging fields, but also to meet the challenge of developing large fields in difficult conditions.

Such ground-breaking projects can still be found in Norway. Ormen Lange, for example, is located at depths of up to 1,000 m at the bottom of an ancient seabed slide. The multiphase pipelines connecting its subsea production facilities to the shore terminal have to cross a rugged and sharply sloping seabed. The project poses numerous challenges, both in the installation and operational phases. Statoil's Snøhvit project involves a 160-km direct tie-back to shore, combined with carbon dioxide reinjection beneath the seabed.

The latest advances in communications technology could also prove beneficial to our industry by opening up the possibility of transferring many tasks now performed offshore to the beach. Companies such as BP and Hydro are now taking the first steps into this exciting new world.

The tradition of technology development based on innovation provides an important foundation for Norwegian service and supply companies to seek to secure their own long-term futures by becoming players on the world market, offering products and services that can compete with the best.

Norwegians were among the first to appreciate the importance of environmental technology. This experience is proving valuable as the government moves to establish a framework for oil and gas production in the environmentally sensitive Barents Sea. How we tackle this challenge could prove relevant for our neighbor Russia in its plans to develop the hydrocarbon resources in its part of the Barents.

Some of the challenges we face in seeking a long-term future fall to the government. As our offshore sector matures, it is the government's responsibility to adjust the framework conditions for the industry to provide the right degree of incentive, including an appropriate level of taxation.

The government also has a key role to play in sustaining an appropriate level of exploration activity by providing access to new acreage. Following some disappointing wildcat drilling in recent times, we are optimistic that prospective acreage in our northern waters that is now closed to exploration will be opened before long.

The diversity of initiatives ongoing in the North Sea will be reflected at ONS 2004 next August. The theme is "Shaping the Energy Future." As usual, ONS will provide a platform on which all the sectors of the industry can jointly map the way forward. At the conference, we will debate the key issues and future opportunities, such as the potential offered by eOperations. Human resources are also a vital concern, and we will ensure that the voice of the young professionals who will be responsible for the future development of our industry is heard. The exhibition, one of the industry's key international meeting places, will provide a vista of the best that the service and supply sector has to offer.

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Kjell Ursin-Smith is Managing Director of the Offshore Northern Seas Foundation.

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