Third time's the charm

June 4, 2015

Forty years ago this month (June), after a frenzy of exploration and something of a race to be first, first oil was produced from the UK North Sea.

Opened by then-UK Energy Secretary Tony Benn, the Hamilton Brothers’ Argyll field beat BP’s Forties field to the post by just over three months. Hamilton Brothers had upstaged BP by deploying a floating production unit – a modified drilling rig – with shuttle tankers to export the oil.

As our regular readers will know, this year, too, is OE’s 40th anniversary. What may be truly amazing to those bell-bottom-wearing early pioneers, both at OE and at Hamilton Brothers and BP, is that all three are still going (albeit with something of a stop-start history at Argyll), despite early expectations that the industry would be short-lived.

OE, like the North Sea’s innovative supply chain, has continued to grow, expanding globally. Forties is still producing, well past its expected cessation of production date, and, despite decommissioning activity becoming a growing reality on the UK Continental Shelf (see our feature focus in the July issue), Argyll is due to be revived for the third time in its life later this year.

Argyll’s story should be a welcome one in today’s climate. Despite being given up twice – the first time due to low oil prices – the industry has persisted and found news ways to produce the field.

Argyll was discovered in 1971, 310km southeast of Aberdeen, Scotland. In June 1975, first oil from Argyll was pumped onto the 35,000-ton tanker Theogennitor from the Transworld 58 semisubmersible drilling rig (pictured on a barge above at a later date, photo from Cromarty Archive), which had been modified to function as a production platform, some 180mi off the Firth of Forth, AP reported at the time. 

In 1992, Argyll’s life was to be cut short. The field was decommissioned due to the low oil prices. Argyll had, during 1975- 1992, produced 74.8 MMbbl*. At cessation of production, the field was producing 5000 bo/d with a 70% water cut.

However, with reserves remaining in the ground, a new operator decided it was worth bringing back into production. Tuscan and Acorn renamed the field Ardmore and brought it back on stream in 2003, producing 5.2 MMbbl up to 2005. But, due to low profitability, it was again decommissioned.

In 2011, another new operator – thrice lucky for Argyll – UK independent EnQuest took over the Ardmore license and submitted plans to redevelop the field, renaming it Alma, via six production wells and two water injection wells, from two subsea templates, using the 57,000 boe/d and 625,000 crude storage capacity Uisge Gorm FPSO, now renamed the EnQuest Producer (pictured during a recent yard stay). Last month, EnQuest started pulling in risers on the EnQuest Producer and first production is expected mid-2015.

It’s later than EnQuest’s initial 2H 2013 plan, but, it’s better late than never for the former Argyll field. According to EnQuest, field life on Alma will be  about 10 years, with 20.7 MMbbl base case recovery.*

It proves both the willingness and ability of smaller players, both at Forties (now-operated by Apache) and at Argyll, under EnQuest, to eke the maximum remaining reserves from these fields. The concern is, however, that the attractiveness of such an enterprise is lessened due to lower oil prices as well as the already high prices on the UKCS. And as activity around decommissioning ramps up, less infrastructure will remain in place, into which smaller projects can be connected, helping to reduce costs.

Either way, as technology continues to evolve, new basins, margins and geologies open up. We’re pretty sure there will still be an active North Sea for OE to report on in another 40 years’ time.

*According to current operator EnQuest’s environmental impact assessment for the current Alma project.