* Wood Review highlights 6 areas for technology focus
* New regulator expected to work with oil start-ups
* Enhanced Oil Recovery key to getting final barrels out
By Stephen Eisenhammer
LONDON, Feb 25 "Nodding donkeys" floating at
sea, water injection, and "outside-in" subsea oil taps that can
withstand the pressure found in the chamber of a firing gun are
some of the technologies vying to keep the oil pumping in
Britain's North Sea.
Britain's government is now planning to push companies to
embrace new technologies to stem a decline in oil recovery which
has seen production from the UK Continental Shelf fall 40
percent in past three years.
The Wood Review, Britain's first strategy assessment of its
oil and gas potential in more than 20 years, was published on
Monday, and the government immediately implemented its
recommendation to create a new regulator.
The review also called for nurturing technology through
industry work groups supervised by the regulator, and placing an
increased responsibility on operators to develop, install and
share results of using new technology.
The report stressed finding new ways of getting more oil out
of reservoirs, reducing the cost of dismantling infrastructure
like platforms and pipelines, improving exploration, making
traditionally unviable small fields economical, and operating
under high temperature, high pressure (HPHT) conditions.
Small firms which tend to lead this innovation complain
often of the challenges of having their technologies accepted by
the wider industry, so how Britain's new regulator will push
innovation will be crucial.
One such company is UPB, which is trying to transform North
Sea recovery with an unmanned oil producing buoy which works
much like the onshore "nodding donkeys" typically seen in the
Texan desert. It costs two thirds less than the closest
alternative and can operate at a cost of $4 per barrel.
Its founder and chairman Richard Selwa says the oil majors
can no longer be relied on for technological breakthroughs in
mature basins where the potential prize is small.
"Marginal fields of between 2 and 20 million barrels is not
an area where the super majors want to spend there money," Selwa
told Reuters. "Ultimately the government can give the stimulus,
the drive, the energy to make things happen... Your government
really can help you," he added.
UPB received government grants at an early stage, which
Selwa describes as absolutely critical to the firm's
The company signed a memorandum of understanding with FTSE
100 engineering firm Amec last year to install three
unmanned buoys in the North Sea. It expects to have its buoys in
the water by 2017.
Rival Enegi Oil is also using similar technology to
develop fields in the North Sea and hopes to have a Field
Development Plan, an important step in the development process,
completed for its Fyne field in the next six months.
Another small innovator is Plexus, developing a
subsea wellhead - a tap controlling flow from an oil well -
which works from the "outside in", using hydraulics to squeeze
the wellhead onto the supports for the pipe going into the
Plexus says its system is safer, more reliable and cheaper
over the long-term and will be suitable for increasingly common
ABERDEEN VS STAVANGER
With high oil prices making it worthwhile to invest in
squeezing more oil out of old fields, technology has helped keep
the North Sea economical over the past decade. But while an
estimated 12-24 billion barrels of oil could still be produced,
new techniques are needed.
In recent years Norway's city of Stavanger has successfully
cultivated an oil technology hub through a strong regulator, tax
subsidies and a national oil company - Statoil - which
invests in and trials new kit and methods.
Britain, where the North Sea has been managed with more of a
laissez-faire policy and without a national oil company, has had
less success in encouraging companies to invest in local
research and development. Increasingly they have invested in
technology to be used elsewhere, such as in Brazil or West
"The amount of R&D and the introduction of new technologies
could have been greater. There hasn't been nearly as much R&D as
there was in the '80s," Alex Kemp, professor of petroleum
economics at the University of Aberdeen Business School, told
"So far we have very little genuine enhanced oil recovery
schemes, we only have some starting now," he added, referring to
BP's decision to inject water to get more oil out of its
Clair Ridge field.
The Wood Review stressed the importance of enhanced oil
recovery (EOR), where water, gas, or chemicals are injected into
the reservoir to force out more oil. The method can increase the
amount of oil recovered from a reservoir to around 75 percent,
from below 50 percent.
BP is using a form of EOR with low-saline water for its
Clare Ridge project in the North Sea, the first large-scale use
of the system in the area, and says it will enable an extra 40
million barrels to be extracted.
The Wood Review suggested the regulator could block plans,
or even take licences away, if operators did not demonstrate
they were using effective technology to maximise oil recovery.
For Malcolm Webb, head of industry group Oil and Gas UK,
this is one of the most important roles of Britain's new
regulator - pushing companies, often hesitant about using
relatively unproven systems, to use new technologies.
"I think that's where the new regulator can play a major
role... Making sure people are aware of the technology and
encouraged to use that technology in their offshore