| dc.description.abstract | This investigation has attempted to provide acurrent estimate
of the oil potential of the northern North Sea from which estimates of
exploration investment, development investment, and accruing cash-flows
can be derived. Current proven reserves are estimated at 29.4 billion
barrels oil equivalent, of which 22.6 billion barrels are oil. Of the
59 discoveries documented, 8 can be classed as true gas accumulations.
Undiscovered potential for the area of study is estimated at 24.3
billion barrels, giving a most probable ultimate recoverable reserve of
53.7 billion barrels oil equivalent. Depending on minimum commercial
field size, recoverable oil reserves should vary between 33.7 and 39.2
billion barrels.
Current development of 14.8 billion barrels of recoverable oil
involves an estimated capital investment of $16.8 billion dollars. Peak
daily production is estimated to occur in 1981 at 4.12 million barrels
daily. An additional 4.6 billion barrels of recoverable oil is in
various stages of evaluation and will probably be developed, yielding a
total of 19.4 billion barrels of reserves and a total peak production of
4.95 million barrels per day in 1981. Capital investment is estimated
at $27 billion dollars for the total.
In order to develop current plus discovered plus future discoveries, private industry is estimated to require between $56 and $70 billion
dollars. Most of this investment, including approximately $6 billion
additional outlay for exploration, is anticipated to occur between now
and 1985. Peak production of 6.58 to 7.85 million barrels per day is
estimated to occur around 1986, representing a total reserve development
of approximately 34.4 to 38.4 billion barrels of oil. Private industry
is anticipated to earn between $30 and $56 billion dollars whereas
government take, assuming a lower discount rate, is estimated to run
between $83 and $222 billion dollars. Critical to this analysis are assumptions about host-government
tax policy and the world price of crude oil, especially as pertaining
to "marginal" North Sea fields. Utilizing an econometric model developed
by the Supply Analysis Group of the M.I.T. World Oil Project, investigation of discounted cash-flow profiles for various field sizes indicates
that access to crude supply and development of subsequent discoveries
appear to be the primary economic incentives for continuing to operate
smaller fields after peak production is obtained. Tax policy and high
operating costs relative to productive capacity tend to make small fields
less attractive investments. Finally, it is patently obvious that very
high per-well productivity is essential for viable development of North
Sea fields under current economic, political, fiscal, and technical
constraints. | en |
