When we talk to folk in the industry, about our plans to steam the Pilot, Elke & Narwhal fields in the middle of the Central North Sea, sometimes we get a pretty sceptical reaction, sometimes we don’t. I prefer it when we get to talk positively about the potential of steaming offshore reservoirs, but not everyone has an open mind. You see, that’s not how the industry develops heavy oil in the North Sea. How to develop North Sea heavy oil was all worked out in the early nineties by the people who put together the development plans for Alba, Captain, Harding & Gryphon, the last wave of heavy oil developments in the UKCS.
When we are presenting our plans to fellow professionals, we often get asked, why steam from the start, surely steam flooding is an EOR technique? It is a good question, as generating steam is not cheap, of course we have a good answer to the question and the more we think about it the better the answer gets.
Back in February, I wrote about how I expected upstream capital costs to fall as the oil price collapsed, and then in July, I wrote again with an update on how the IHS UCCI (Upstream Capital Costs Index) had actually fallen up to that time. Well, this is a further update on that, mixed in with a bit of speculation on how far the fall might go before we touch bottom.
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.