Chapter 8: The economics of field cluster developments in the UK continental shelf
8. The economics of ﬁeld cluster developments in the UK continental shelf Alexander G. Kemp and Linda Stephen INTRODUCTION The UK North Sea is now in its mature years. Oil production has peaked. Gas production will continue to grow for another few years on the basis of ﬁelds under development, but thereafter decline is very likely. The average size of discovery has been falling for many years, and over the last few years the exploration success rate and the exploration eﬀort have been lower than in earlier periods. There is, however, a substantial inventory of undeveloped discoveries. The industry is currently seriously examining for development over 50 ‘probable’ ﬁelds as well as over 70 incremental investment projects in mature ﬁelds. A further 278 discoveries containing information on their possible size, type (oil, gas, condensate), and location by block number are in a database constructed by the present authors. Most of these undeveloped discoveries are quite small. On a stand-alone basis many are not economically viable. This leads to the notion that joint development of a group of ﬁelds might be viable where individual projects remain unattractive. Joint development could involve beneﬁts from (a) economies of infrastructure cost sharing and (b) risk sharing. These subjects are investigated in this chapter. INITIAL SCREENING OF POTENTIAL It is likely that the most economical method by which new ﬁeld developments can be undertaken is via the utilization of existing major infrastructure. This includes pipelines and processing facilities on platforms. Sometimes new ﬁelds...
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