Everyone knows J. Paul Getty's formula for success: rise early, work hard, strike oil; and pretty much everyone I know in the oil business rises early and works hard, some of them even strike oil. So it's hard to find many oil folk who don't believe in the quote, of course the tricky bit is the last part of the aphorism. Striking oil generally requires a decent dollop of good fortune as well as brilliant geoscience and that elusive material, money; however when we do strike oil these days we generally manage to keep it in the well, unlike these pioneers in times past who needed to have a decent turn of speed when they struck oil.
However as Brent dips below $45/bbl even striking oil doesn't cut the mustard these days. In fact investors enthusiasm for a successful well often wanes when they realise how much capital needs to be raised to develop the discovery and how little appetite larger companies have for new projects right now. They have cost cutting agendas to pursue for goodness sake.
However, J. Paul Getty left us with another saying that I think has much more relevance for today's oil and gas business and in particular for the UKCS. He also said, "No one can possibly achieve any real and lasting success or 'get rich' in business by being a conformist." In other words, if you do what everyone else does you, are destined to be in the pack, just average.
As I said most people I know in the oil business rise early and work hard but finding people who actually follow J. Paul Getty's second piece of advice is quite a different matter. Genuine non-conformists are as rare as hen's teeth and the few renegades who are prepared to try something new are forever being hunted down by the peer review and stage gate approval processes designed to make sure nothing new is ever attempted until someone else has done it before. The gold medals in the technology implementation race are handed out for second and third spots. This is especially true in the North Sea oil and gas business where most projects are multi-billion dollar undertakings and risks really have to be managed. But the result of that risk management process is that we in the UKCS are lagging behind in the business of innovation.
The UKCS oil and gas industry didn't start out by being average or doing what others had done before and its salvation doesn't lie in repeating past glories again and again. Having surveyed the business here, after a fruitless sojourn in Africa, it seems to me there are three great opportunities to make a real difference to oil production on the UKCS that need to be grasped.
The first is the basement play West of Shetland. Hurricane Energy has led the way here, yet its share price languishes on the floor. Hurricane's farm-out process is well underway but, at least as I write this, no major company has farmed into the project; not even Hurricane's slimmed down EPS-Light scheme, which is designed to test some of the key risks on the overall development of these reserves. However, the real upside in this play can't be tested by producing the horizontal well that sits above the structural closure on the Lancaster field. The big, big upside here depends upon the oil that is believed to extend down the fracture system below structural closure. If that works, the scale of this play would be measured in billions of barrels. That's the first play and whichever company partners with Hurricane will have a leading position in it.
The second is the potential to get really high recovery factors in heavy oilfields by applying steam flooding offshore. Given that I am CEO of The Steam Oil Production Company Ltd, you might not be shocked to find me writing these lines, but we are pretty certain that there are about two billion barrels of additional reserves that can be produced using steam flooding offshore. People think of steam flooding as an EOR technology, but this is not a question that should be thought about once the primary recovery process has finished. The best, most economic time to implement a steam flood is before a drop of oil has been produced; there is no need to wait until thirty-five years of water flooding has swept out all the oil which that process can recover. Frankly, there is no time to lose on this, there are development projects underway or about to get underway that will waste time and energy trying to push heavy viscous oil out of the reservoir with water, when steam would sweep twice as much oil out in half the time.
The final play is the toughest nut to crack. It is the multitude of small oil discoveries scattered across the North Sea, some physically stranded (nowhere near infrastructure), some commercially stranded (next to infrastructure that is full) and some just a bit too unexciting to attract capital. There are no end of initiatives to address this problem, but it seems to me that the key to unlocking these fields lies in simplification and standardisation, alongside a dash of multiphase metering. We aren't good as an industry at simplification, in fact back in the early nineties when I was working on a group trying to reduce project costs the team was called the "Project Decomplexification Taskforce". But that is what is needed to progress these projects – technical and commercial simplification and standardisation.
For what it is worth, we are going to work on strand two, Dr. Robert Trice has done an amazing job on strand one, and I think the key to strand three will come from collaboration on the supply side of the business. We can't let any of these strands lapse, taken together and pursued with vigour these three plays can reinvigorate the UKCS again.