The Press and Journal (Aberdeen and Aberdeenshire)
‘Traumatic’ year sees operators relinquish up to 1.1bn barrels oil
North Sea operators have handed back up to 1.1 billion recoverable barrels of oil from UK fields, according to data released by the Oil and Gas Authority (OGA).
Relinquishment information from the regulator has revealed the scale of uneconomic or risky fields, often termed as “marginal”, which operators chose not to develop.
Experts said the “severe cash flow pressure” experienced by the oil and gas sector in 2020 will likely have played a role in the 30 licences published by the OGA on May 6, most spanning from September 2020 to February 2021.
Energy giants Total and BP, who are behind major new projects expected in coming years like Glendronach and Clair
South, handed back areas with the vast majority of resources, though a range of other companies relinquished dozens of licences.
On a P10 basis, which represents the high-end estimate, operators handed back 1.12billion recoverable barrels of oil and 673billion cubic feet (bcf ) of gas.
On a P50 basis, which is considered the “best estimate”, these figures drop to 522million barrels of oil and 251.5 bcf gas being relinquished.
Total, in the West of Shetland, looms large, particularly with the relinquished P2214 licence in the Corona Ridge region with the Callanish prospect, which was handed back in November.
Callanish holds up to 269million recoverable barrels of oil, while the whole licence, including parts which were relinquished by Total in late 2019, contains total recoverable resource of 492m barrels combined in the high-case, and 206million in the middle estimate.
Reservoir quality at Callanish was deemed a “key risk”, with similar issues for the others, after Total acquired new seismic data across the licence, deciding to relinquish it fully at the end of November.
In the central North Sea, Total and BP were partners on a single licence, P2386, which contained 10 marginal prospects, with a combined mid-case of 107m barrels and 231m in the upper estimate.
However, studies showed what the firm described as “very limited Triassic prospectivity”, leading to the relinquishment.
BP also handed back the Elgar prospect in the central North Sea, which came after an unsuccessful farm-down and announcement it was selling its Andrew area fields last year.
The oil giant said the relinquishment of the prospect, which contained up to 201m recoverable barrels and 309bcf, was to “align exploration work programmes more closely with BP’s strategy in the North Sea region”.
Other prospects, such as the BP-Ithaca Vorlich West, the Equinor-Shell Lillyvick and the NEO Energy Ada West were considered too high-risk for potentially low reward.
Professor Alex Kemp, petroleum economist at Aberdeen University, said 2020 was a “traumatic year” for the sector as the oil price fell below $20 and severe pressure on cash flows may have precipitated much of the relinquishment.
He said: “There will be fields which will never be developed. Some of them have just been relinquished.
“Now, whether anybody else will take them up is a question and, who knows, some of them might, but a bit doubtful.”
However, Brent Crude is now in relative health and the OGA’s 32nd licensing round last year saw 98 of 113 licences offered taken up.
Professor Kemp said: “The price has come up enormously to $71, so I’m hoping that in the second half of the year we will actually get some positive field developments.”