The future development of the North Sea’s marginal fields represents “a huge market with unforeseen potential”, according to oil industry consultant RMRI.A report, commissioned by Enegi Oil’s (LON:ENEG) associate ABT Oil & Gas, claims technology will be the key to unlocking scattered, smaller North Sea discoveries and doing so could yield £40bn of oil revenues.

“New technology will be key to enabling the exploitation of new and complex discoveries which are generally smaller and often remote.

“Given that new technology will likely take years of testing and intense scrutiny before gaining industry acceptance, existing and proven technology solutions are needed to deliver immediate results.”

This is the opportunity that ABT’s assembled assets seek to exploit.  It has developed and acquired number of marginal field solutions, which basically bring together proven existing technologies.

A critical point, in terms of project economics, is that these technologies can be adapted and redeployed, meaning they could service a number of marginal fields over their lifespan.

Illustrating the economic value of such an approach, RMRI’s lays out a potential scenario, based upon a single unit being used on three separate marginal fields each with 10mln barrels of reserves.

“The model starts with a single field producing for 6 years and at the end of production, an 18 month break to retrofit the SIFT is taken and a second field is subsequently developed using the same SIFT. This process is repeated for the third field and eventually, close to 30 million boe is produced over a 21 year period.

“With oil prices fixed at $90 per barrel, the project generates revenue of £1.7 billion based on an estimate capital and operating expenditure of over £660 million.

The project generates a pre-tax profit of just over £1 billion. With £485 million deducted as corporation tax on production for the Treasury, even after deductions for the small field tax allowance, this gives a post-tax profit of £555 million.”

RMRI concludes that ABT is at the forefront of those seeking to maximise the potential value of the maturing North Sea oil industry.

“There has not been a significant (multi-hundred million boe) discovery for five years in the UKCS13 and it is uncertain if any will emerge in the future.

“Mature petroleum regions such as the UKCS will therefore become increasingly reliant on the development of smaller, marginal hydrocarbon reserves which will struggle to be exploited using relatively high cost conventional production systems.

“As such, a huge market with unforeseen potential exists which can be unlocked by applying proven, innovative production systems to achieve significant cost savings and early production delivery.

“ABT is at the forefront of these developments with access to technologies, systems and a business model ideally suited to marginal field opportunities.”

http://www.proactiveinvestors.co.uk/companies/market_reports/70971/oil-column-north-seas-marginal-fields-seen-as-huge-opportunity-0000.html