Oil Strike North Sea E-Book

Mike Shepherd

• Herausgeber: Luath Press
• Kategorie: Geisteswissenschaft
• Sprache: Englisch

Seitenzahl: 399

Veröffentlichungsjahr: 2015

Beschreibung

Becoming the centre of public debate during the 2014 Scottish referendum, the North Sea oil forms a crucial chapter in Scottish history. Written by an industry insider, a combination of lightly technical explanation and anecdotal accounts explore the process of developing new oil fields and oil production. A poignantly human perspective of a lucrative and challenging industry, Shepherd highlights the importance of the reserves to a nation, and the impact of the production surge upon the men and women of the local community in Aberdeen.

Leseprobe

Oil Strike North Sea

A first-hand history of North Sea oil

MIKE SHEPHERD

First published2015

ISBN (EBK): 978-1-910324-55-4

ISBN (BK): 978-1-910745-21-2

The author’s right to be identified as author of this book

under the Copyright, Designs and Patents Act1988has been asserted.

Map by Jim Lewis

© Mike Shepherd2015

To those who made it happen

Contents

Map of the North Sea

Acknowledgements

Preface by Diane Morgan

Introduction

Timeline

CHAPTER 1Finding a North Sea Oil Field

CHAPTER 2The First Oil Fields are Found

CHAPTER 3Appraisal and Production

CHAPTER 4Aberdeen

CHAPTER 5Local Heroes

CHAPTER 6New Challenges

CHAPTER 7Offshore

CHAPTER 8The Forties Field

CHAPTER 9Big Money

CHAPTER 10 BPand Britoil

CHAPTER 11Occidental andELF

CHAPTER 12Oil Reserves

CHAPTER 13Out West

CHAPTER 14The End of Oil

CHAPTER 15The Geological Story

Picture Section

Endnotes

Acknowledgements

Many thanks to all those who helped me write this book. A special mention goes to Diane Morgan for inspiring me to write this book; Andy Gordon who helped me with the technical issues; Barney Crockett who gave me a deeper understanding of the political and social background to the arrival of the oil industry in Aberdeen; and to Ian Weiss, instrument technician on Forties Echo who sent me the fantastic photo used for the front cover. Sveta read the text and suggested several improvements – much appreciated! A final mention goes to Jennie Renton for her able and wise editing of the text, thanks Jennie!

Preface

Given the financial importance of the exploitation of North Sea oil during much of the past half century, the essentially innovative nature of its technology and the larger-than-life reputation of its workforce, its literature, barring technical and economic papers, is surprisingly scant and heterogeneous.

But now Mike Shepherd has written his own history, Oil Strike North Sea. It is a neatly rounded, much needed history, providing us with the complete story of North Sea oil, and rather more. Given the depth of its subject matter, it is an amazingly readable book, replete in detail. An account of how techniques have changed over the past 40-odd years is one of its merits.

Each chapter is a complete entity, yet all flow smoothly, one after the other. The discoveries began with the giant Ekofisk oil field in the Norwegian sector in October 1969, followed that December by the oil company Amoco, making the first commercial oil find in the uk North Sea sector, 220 kilometres east of Aberdeen. The company was looking for gas rather than oil and lacked the necessary steel containers to ship the oil onshore for analysis. But oilmen are never at a loss, and an empty pickle jar, purloined from the galley, was used to transport the precious find from the rig back to the oil company office. Little touches like that are one of the delights of the book.

‘Oil companies,’ Shepherd writes, ‘will search for oil relentlessly.’ When oil is found, ‘a patch under the North Sea is transformed from commercial nothingness to an oil field worth many hundreds of millions of pounds’. This is a staggering thought. But there can be a reverse to the coin: ‘There is much agonising over whether there might be some oil in a moderate-sized bump 3,000 metres under the North Sea; you finally convince yourself and everybody else that there could be oil and then the oil company spends £25 million on a well which doesn’t find anything.’ This is not an unusual happening.

On being given a book on careers in science for his ninth birthday in 1964, Mike Shepherd was inspired by the chapter on geology: ‘From then on I wanted to be a geologist when I grew up, little knowing that before long the services of professional geologists would be in heavy demand in my home city.’ There was a touch of serendipity there.

Shepherd carries his learning lightly in this vital and enlightening study. Its appearance will hopefully mean that the geologists’ input – a blend of knowledge and intuition – will become more widely recognised. Certainly, Oil Strike North Sea will now take its place in the front row of books on the industry, along with Anthony Sampson’s superb The Seven Sisters.

Diane Morgan,

Aberdeen 2015

Introduction

THE GIGANTIC EFFORT involved in recovering North Sea oil became apparent to me one day in 1988. I was offshore for a meeting on the Magnus oil platform, the furthest north in the UK North Sea, and flew on a direct route back to Aberdeen by helicopter. It was a clear, bright evening and the chopper was flying straight down the axis of the northern North Sea basin. This was one of the most impressive flights I’d ever taken. At a height somewhere above a thousand feet I looked out of the window and saw platform after platform dotted across the shimmering silver-grey North Sea, each emitting a candle-like flame as they burnt off excess gas from their flare stacks. In between was a host of drilling rigs, either exploring for new oil or appraising oil pools that had already been found. I was acutely aware at the time that I was witnessing a significant moment in our history. The extent of the engineering I saw below me and the rapidity with which it had happened brought to mind a parallel with the construction of the British railway network in the 19th century. The first railway between Stockton and Darlington had opened in 1825, and in the subsequent railway ‘mania’ that took place in the 1840s, most of the cities in the UK had been connected.

Everything was on a huge scale; take for instance the Ninian Central platform, one of the platforms that I had flown past during that helicopter trip in 1988. Ten years earlier I had spent a summer carrying out geological field work on the Isle of Skye. One of my field areas, near the village of Broadford, faced north-east towards the deep waters of Loch Kishorn where you could see the Ninian Central platform under construction. The platform was said to have been the largest structure ever built in the UK and it was clearly visible from Broadford at some 20 kilometres distance.1One morning, I emerged into the open to find the platform had gone. It had been towed out onto its location on the Ninian Field in the northern North Sea. I regretted at the time not having seen it go. The statistics quoted for the tow out in May 1978 were impressive. Including ballast, the concrete and steel structure weighed a combined 601,000 tons.2It was reckoned that up until then, it had been the largest man-made structure ever moved across the surface of the Earth.3The platform had been towed by a team of eight ocean-going tug boats up the west coast and then around the northern part of Scotland, a distance of 690 kilometres. The trip was due to take 12 days at an average speed of just over three kilometres per hour.

The North Sea proved to be a new frontier for the oil companies when they first arrived. They had been offshore before elsewhere in the world, but never in waters quite so stormy or deep. They would try their existing technologies at first, but these were put to severe test and often failed. New ways of doing things were needed if the oil was ever going to be recovered and given the specific problems they faced, the engineering required was colossal.

With an effort on this scale, the North Sea oil industry has proved to be a major and tremendously exciting episode of both UK and Scottish history, yet only a handful of non-technical books have been written about it in the last 30 years. These tend to focus on specific aspects; for instance, two excellent books by Bill Mackie on the oral history of the industry (The Oilmen; Klondykers) and Alex Kemp’s majestic two-volume tome based on government papers and largely dealing with the economic aspects,The Official History of North Sea Oil and Gas.

My approach has been to provide an overview of the North Sea oil industry with a historical narrative thread running through it. It’s not easy to write a straightforward history of North Sea oil although this had been my intention. The industry is so complex that such a book would necessarily have to provide a large amount of context to explain everything that happened. It thus becomes part history/part overview as is the case here. In addition, once oil was found, events spawned a multitude of projects all taking place in parallel. It makes for a more readable book to write about specific themes concerning the industry rather than to itemise each individual project one by one.

At times I found myself close to major events. In consequence, some of the chapters, although they track the narrative history of the North Sea oil industry, do so by following my own first-hand experience. In places, I set out my own views on the political and global context of the oil industry and must stress that the opinions and judgments in this book are mine alone. They are not the views of any of the oil companies I’ve worked for at various times, including BP and Shell. I sell my labour to oil companies, I don’t answer for them.

And finally, no geologist can write about the North Sea without extending the story back through geological time and explaining how the reservoirs and the oil in them got to be there in the first place. This is a separate narrative from the development of the oil industry, so I’ve placed it at the end of the book.

North Sea oil is a story of big money, big engineering, a few spectacular failures and many great achievements. But above all, it’s the story of the men and women that made it happen. This book is dedicated to them, the North Sea Tigers who toil for oil.

Mike Shepherd,

Aberdeen 2015

Timeline

1964Drilling starts in UK waters, with the search for gas in the southern North Sea.

September1965North Sea gas discovered by BP in the West Sole field off the Yorkshire coast.

September1966Oil discovered offshore Denmark by the Dansk Undergrunds Consortium. Now in production as the Kraka field.

1967Exploration drilling starts in the UK central North Sea.

February1968Cod field discovered offshore Norway by Phillips Petroleum.

October1969The giant Ekofisk oil field is discovered offshore Norway by Phillips Petroleum.

December1969Montrose oil field discovered by Amoco in UK waters offshore from Aberdeen.

October1970The giant Forties oil field discovered by BP in the central North Sea.

June1971Oil production starts from the Ekofisk field in the Norwegian sector.

July1971Discovery of the Brent field in the northern North Sea.

October1973Yom Kippur war in the Middle East, the oil price increases substantially.

June1975First North Sea oil produced on the UK side by Hamilton Brothers from the Argyll field.

September1975Forties field on production.

July1977 BP finds oil West of the Shetlands with the Clair field discovery.

March1980Alexander L Kielland accommodation platform capsizes in the Norwegian sector killing 123 men.

May1981Sullom Voe oil terminal in the Shetland Isles opened by the Queen.

1986The oil price slumps.

November1986Chinook helicopter crash off the coast of the Shetland Isles, 45 fatalities.

February1988 BP takes over Britoil.

July1988Piper Alpha production platform blows up, 167 men killed.

May2001Buzzard oil field discovered by Encana.

November2001Marjun oil pool discovered by Amerada Hess in Faroe Islands acreage.

September2014Scottish independence referendum held.

2015Oil price slump.

1

Finding a North Sea Oil Field

THE SEARCH FOR oil is a chancy business. Your boss gives you an area under the North Sea to look at; you sweat the data for months, agonising over whether there might be some oil in a moderate-sized bump 3,000 metres underneath the seabed; you finally convince yourself and everybody else that there could be oil there, and then the oil company spends £25 million on drilling a well which doesn’t find anything. Not a sniff.

You won’t get fired for wasting the company’s money like this even though there’s nothing to show for the £25 million spent. What the oil company is doing is playing a percentage game for very high stakes. Oil companies live in a world of uncertainty and employ strategies to manage their luck. There is never an absolute guarantee of finding oil in any one structure, but drill several structures in a row and you maximise your chances that one will come in. The idea is to point the drill bit at an area under the sea that looks promising but which isn’t necessarily a sure thing – nothing is ever quite a sure thing in the oil business. Maybe only one in three exploration wells will be successful in a good oily patch – but that’s alright – if only one well finds a commercial field, then the effort is most certainly worthwhile; big, big money will be made, indeed far more money than will be involved with the cost of drilling all the wells.

And when a well strikes oil it’s a memorable occasion. I was once offshore when a well came in; it wasn’t the biggest field ever discovered in the North Sea, nevertheless every new field helps to add value to the oil company’s portfolio. The circumstances were rather unusual; it was discovered by accident during the drilling of a conventional oil production well in a known North Sea field. Here’s how it happened.

Our helicopter had landed on the Sedco 707 drilling rig at midday. It was Monday 23 December 1985 and I had gone offshore with another geologist, John Caldwell. John was gaining experience in offshore work and I was there to help him out. The rig was drilling a new oil production well into the south-east corner of British Petroleum’s Forties field. It had been on the go for three weeks and we had arrived at a critical point – the section just above the top of the oil-bearing reservoir, the Forties Sandstone. Our objectives were clear: we had to decide where the long length of steel casing string should go in to shore up the well bore prior to drilling out the reservoir section. We would then track the reservoir down to the base of the oil zone and tell the drillers when to stop. Given the present depth of the well and the rate at which they were drilling I reckoned we had gone out a day before we were actually needed, but because no helicopters had been scheduled to fly out to the rig on Christmas Eve, we had arrived early.

Once we’d unpacked, I suggested to John that he should start work straightaway. John’s job as a geologist involved analysing the rock fragments as they came out of the borehole. The rock material at this point in the well had been cut by the rotating drill bit almost 2,000 metres below the rig and was being brought up to the surface by the circulating drilling mud. The section we were drilling through comprises a monotonous sequence of mudstone, rock that had once been mud deposited on the sea floor 45 million years ago. The porous sandstone which formed the oil reservoir of the Forties field lay another 200 or so metres deeper than where we were currently drilling. John could anticipate having a boring time of it for the next day or two as he logged this section; his logbook would be filled with successive entries such as ‘mudstone, greenish-grey, as above’. Nevertheless, this would help him get into a work routine ready for the main operation to come.

John had gone out to start work and I was lying on the top bunk in my cabin reading a book, when 10 minutes later there was a knock on the door and John came back in again, ‘Could you come and have a look at the samples, Mike? We are drilling through sandstone and there is oil all over the grains.’

I went ‘huh?’ because this wasn’t expected. The Forties field had at that time over a hundred wells penetrating it, and this section in all of the previously drilled wells turned up mudstone with only a few very thin sandstone streaks, none of them containing oil.

Pulling on my overalls, hard hat and rig boots, I followed John out of the rig accommodation to the logging unit, which was located in a portable cabin near the drilling area. Here, a specialist crew called mudloggers kept an eye on all the drilling operations and sampled the rock fragments at the ‘shakers’ in the mud room, mechanical sieves which removed them from the drilling mud. John had been sitting in the geologist’s chair with a microscope in front of him. The rock samples which had been caught during the last few hours of drilling were on glass dishes nearby.

‘Is this the latest sample, John?’ I asked, and on the nod, I placed it under the microscope.

The sample was entirely sand and looked like the sand grains you would find on any decent beach. The grains had been held together in the subsurface as porous sandstone but were now loose after having been disaggregated by the drilling bit. I then placed the dish holding the rock fragments under an ultraviolet light. Any oil present on the grains would show fluorescence under the ultraviolet rays and that’s exactly what I saw, bright yellow, shining fluorescence on the sand grains, lots of it. I took a small sample of the sand grains put them on a clean glass dish and added some solvent with a pipette. I could clearly see the fluorescent oil separating out.

Now this was a big surprise. We were at too shallow a depth for the oil shows to be part of the Forties reservoir itself. I knew it was possible for oil fields to be found at separate levels, one above the other and I realised that this was probably the situation here. In most North Sea fields, oil is found in porous sandstone rock but not in the intervening mudstones. The mudstones act as barriers to oil movement and will seal the oil in the underlying sandstone. I reckoned that John had discovered a new field about 200 metres above the Forties field and the mudstone underneath it was probably acting as an impermeable barrier in between the two oil zones. This was potentially a new oil field which could be worth millions of pounds to the company. The next step was to find out how much thickness of oil-bearing sandstone we had drilled through so far, a thin sandstone streak would probably not have been commercial. I looked at the previous two or three samples that had been collected higher up the rock interval and these all contained sand grains with shows of oil. That was promising, very promising.

In the old days, we would have found a ‘gusher’. The oil under pressure at depth would have pushed its way up the wellbore and gushed out in a fountain above the drilling derrick. This is what happened to the first well to find a big oil field in Texas back in 1901, the Spindletop oil field. If oil gushes out of a well today, it’s because a major blunder has been made and it’s technically a blowout with all the resulting pollution and danger to life that this can cause. The drilling mud in the hole is designed to prevent any oil or gas from escaping out of the rock formation at depth and will be weighted up with the heavy mineral barytes to help it do this. In today’s oil patch you strike oil the modern way – the geologist examines the rock cuttings brought up in the drilling mud to see if there is any oil on them as John had done here.

The logging cabin had a phone in it and unusually for a drilling rig it had a direct connection to the office. Normally you would have to go through the radio operator to contact ‘the beach’, the colloquial term the riggers used for anywhere onshore. I called my boss and told him what we had found. The news was to cause a sensation in the oil company. After drilling over a hundred wells in an established field, it was indeed astonishing to accidentally find a new and separate oil field lying above it.

The find was later called the Brimmond field and is named after a hill that overlooks the city of Aberdeen. The name is appropriate, as the telephone call I made to the office to announce its discovery was relayed through the communications system on top of Brimmond Hill. It’s not the biggest oil field in the UK North Sea; that honour goes to the Forties field which sits underneath it. Published records show that the Brimmond field produced 2.5 million barrels of oil between 1996 and 2004.4Now I realise that this sounds like a lot of oil and in a way it is. A barrel is the unit of measurement commonly used in oil fields and this comes from the early days of oil production in the United States. Nobody uses barrels to store oil these days, nevertheless the term has survived. A barrel is equivalent in volume to 159 litres. The refined oil products from the Brimmond field would thus fill up many a fuel tank, yet for a North Sea field, 2.5 million barrels is small and puts the Brimmond field at the low end of the range of commercial oil field size offshore.

Let’s talk money here; how much was the 2.5 million barrels of oil produced by the Brimmond field worth? I reckon the value created by John and myself going offshore a day early was about £38 million before tax and costs, not bad for a day’s work, I suppose. One of today’s oil company economists would not be too impressed by this figure, however, and perhaps with good reason; £38 million is almost petty cash for an oil company. Put into perspective, this sum could easily be the cost of a deep exploration well in the North Sea. OK, the oil price was relatively low at the time when Brimmond was on stream and yes the field is small; it might not even have been developed had it not been located in an area already kitted out with production platforms and a pipeline.

Yet, £38 million is £38 million and all these little projects add up to make big money for an oil company. Finding the Brimmond field also brought an extra bonus. One benefit of making an unexpected oil discovery somewhere different in the geological succession is that it makes you look to see what other oil pools could be lurking in the same area. Indeed, two more small oil fields called Maule and Tonto have since been found above the Forties field by the American oil company Apache and put on production. The Maule field is still flowing as of 2015 and according to UK government figures it has produced just over 2 million barrels of oil to date; the Tonto field has produced 770,000 barrels of oil and is still on stream.5In the oil biz this is referred to as unlocking value; if you find one oil field in a new patch, then similar-looking structures nearby are likely to yield oil too.

If the Brimmond field has recovered 2.5 million barrels of oil, the much larger Forties field just underneath it has today produced over 2.5 billion barrels of oil, a thousand times as much.6British Petroleum (BP) were making so much money from the Forties field in the late 1970s, one manager claimed that at the then tax rate, BP would eventually be able to buy up most if not all of the whole of the UK’s manufacturing industry if they had ever wanted to.7

Only a few oil fields are discovered by accident as was the case with the Brimmond field. Usually the discovery of an oil field is predicted in advance by a team working in an oil company’s exploration department. Oil companies will search for oil relentlessly. Their reserves deplete with time and will eventually run out unless they get hold of new resources somehow. Thus oil companies will spend a lot of money and take big risks to find more oil. And when a new oil find is made the hurrahs will resound. For instance, the American oil company Occidental made a big fuss out of any team finding oil in its North Sea acreage. An early morning ceremony would be held in the Aberdeen office with the members of the team awarded with specially made badges labelled ‘oil finder’. Afterwards a bus would take the team out to a hotel north of Aberdeen, where a champagne breakfast would be laid on for them.

I once worked for a small exploration team on a block where oil was found in the northern North Sea. Not by us, although we did assess the acreage to be promising. The asset was sold on and it was another company who worked up the prospectivity in detail, drilled the area and found the oil. Altogether four oil pools have now been discovered in a cluster now known as the Western Isles Development. Here is the published information on the project taken from the website of the operator, Dana Petroleum: two of the oil pools are to be developed and they will be known as the Harris and Barra fields. An estimated 45 million barrels of oil equivalent are recoverable from them through five production wells.8 Once the fields start production in 2015, the initial rate will be about 40,000 barrels of oil per day and the estimated field life is 15 years. The overall cost of the project is an expected $1.6 billion and it is anticipated that it will create up to 200 new jobs.9

This is an example of how value is created by those working in oil companies. The exploration effort had conjured up prospective oil pools which were then found. Thus a patch under the North Sea had been transformed in commercial terms from conceptual nothingness to oil fields worth many hundreds of millions of pounds. A large addition to the capital value in the global economy is made by oil company personnel finding petroleum in this way. Those that create value in the company’s exploration or subsurface groups are well rewarded. Experienced personnel at the sharp end of the industry will earn a six-figure salary and highly experienced independent contractors in the same line of business have been known to charge the oil companies at least £1,000 per day for their services during the boom times.

The first step in exploring for oil offshore is to obtain seismic data over the area of interest. A custom-built boat is sent out to the North Sea to shoot the seismic; it does this by popping an air or water gun in the seawater. The sonic pulse is powerful enough to be sent down through the sea and then penetrate through several kilometres of the underlying rock. Some rocks in the subsurface are harder than others and will cause part of the sonic energy to be reflected back up to the surface again. The boat trails behind it a long tail of detector instruments to pick up the returning energy. The time it takes for the pulses to come back is also recorded. The energy travels fast so this may take only two or three seconds for the round trip. The seismic data is displayed in long sections and at a glance they resemble cat-scans through the crust of the Earth; it’s as if the rock column in the North Sea has been cut away to shows its structure.

The seismic interpreter is given the job of making sense of the data and will be looking for any suitable feature that could potentially trap the oil. The simplest is a dome-shaped structure like the Forties field that catches the oil as it migrates upwards through the rock column. In the early days, seismic data would be printed out on long paper sections, often a metre or more in length. The interpreter would sit at their oversize desk picking out the geological markers with coloured pencils. Today, they track the seismic horizons with a computer mouse on the screen of a work station.

Every now and again, you get a hint from the seismic data that oil or gas may be present, not that often, but sometimes you do. It’s commonly an indication of gas rather than oil, as a gas-filled reservoir shows a larger density contrast from the surrounding rock and can ‘brighten up’ on seismic lines. On other occasions you can see ‘flat spots’ on high-quality seismic data. The strata may be tilted at an angle or folded, yet cutting through the strata is a flat-lying seismic reflection that represents gas (usually) sitting on top of a flat contact with water or oil saturated rock. Back in the late 1970s, a friend of mine noticed a flat spot on seismic data which had been shot in the Norwegian sector of the North Sea. It looked like a direct indication of hydrocarbons, yet it covered a very large area. He knew only too well that these types of signal are often misleading. You sometimes get a feature equivalent to a mirage in the desert on seismic lines, a solid-looking reflection that cross cuts everything, but is in fact an artefact related to how the initial seismic pulse sent down from the surface has a tendency to bounce around between the rock strata. Yet could this flat spot possibly be a direct hydrocarbon indication showing that an enormous gas field extends over 700 square kilometres of four Norwegian licence blocks? Yes, became the answer once it was drilled. The Troll gas field, as it is now called, contains about 40 per cent of the total gas reserves in the Norwegian North Sea and is expected to produce for 70 more years to come.10

While the seismic is being interpreted, the geologist will be busy mapping out the subsurface geology. In addition to locating a suitable structure to trap the oil, a further requirement is that there has to be a reservoir rock present and a cap rock above the reservoir acting to seal the oil in. A typical North Sea oil field holds oil in a sandstone reservoir and the cap rock is mudstone. The sandstone was once sand, perhaps deposited on a beach, river, or in submarine channels. The mudstone was once mud, typically laid down in the open sea after the sea level rose quickly and drowned the underlying sands.

Sandstone provides the ideal material to form an oil reservoir as it is porous and the oil can be stored in the pores. It is surprising how many people outside the industry think that oil is found in some giant hole in the ground akin to an underground storage tank or cave. Forget that idea, oil is stored in pores within rock. The pores in sandstone are barely visible, generally a fraction of a millimetre in diameter, but there are a multitude of them. At shallow depths as much as 35 per cent of the sandstone rock is pore space, although with increasing depth the porosity tends to decrease perhaps down to 10 to 15 per cent or even less. The pores link up throughout the framework of the rock and this structure allows fluids such as oil to move in and out of the permeable sandstone.

Lying above the sandstone reservoir is the mudstone cap rock. The rock is fine grained and holds on very tightly to the water in its pore space. It acts like the most powerful sponge possible; even buoyant oil and gas under pressure cannot displace the water from the tiny pores of the mudstone and the oil is trapped in the sandstone reservoir underneath, unable to escape.

Having defined a reservoir interval and a cap rock to provide a seal, all we need to do now is to figure out if oil managed to find a way into the trap. Almost all of the oil in the UK North Sea is sourced from a 155 million year old organic-rich mudstone called the Kimmeridge Clay Formation. It’s named after the village of Kimmeridge near the coast of Dorset where it outcrops onshore and is widespread in its distribution across much of the North Sea. A good source rock should contain a significant volume of organic material; organic material making up more than two per cent of the rock shows potential, 10 per cent would be a very good figure. In the case of the mudstones from the Kimmeridge Clay Formation, the organic material is largely the remains of marine algae and plant material which had accumulated in the sea bottom mud back in the Jurassic Period.

Oil takes millions of years to form as the source rock has to be buried to a sufficient depth before it will be generated. The floor of the North Sea is continuously subsiding and as it subsides, more and more sediments are deposited at the bottom of it. In the 155 million years since the organic mud of the Kimmeridge Clay Formation accumulated on the seabed, two to three kilometres of sediment has gradually been dumped on top of it by river, current and tide. And as the mudstone becomes buried deeper and deeper under this pile, the temperature increases. Eventually the depth of burial will be such that it is hot enough down there for oil to form as the organic material breaks down and liquefies. A temperature of 80–150oCelsius will suffice. However, if the organic mudstone ends up buried too deep, it gets too hot to generate oil and gas will form instead. Over large parts of the North Sea, the mudstones of the Kimmeridge Clay Formation are buried at just the right depth to generate oil – lots of it. Not only that, the oil is typically a light, sweet, low sulphur crude which commands a premium price compared to the lower quality crude oil commonly produced from elsewhere in the world.

If you can work out a spot in the North Sea where the various factors potentially combine together for an oil field to be present, then that’s your exploration prospect. Yet it’s not that straight forward. Often the only data you have available to help you comes from wells that have been drilled at some 10 or 20 kilometres distance from the exploration acreage you are investigating, sometimes more. If these wells are known to contain reservoir rock, you have to use your geological skills to try and predict whether the reservoir interval somehow manages to extend all the way over to your prospect. You can never be too sure about this, so you try and work out the probability of it happening. After also factoring in the probability that the trap seals and that oil has managed to get into the trap, you end up with an overall probability that the exploration target is likely to be successful. Because of the vast amount of money that will be required to test the prospect, ideally you want the overall probability to be as high as possible; a 20–30 per cent chance of success is getting there, although the threshold prompting a decision to drill will vary depending on the oil company involved.

The volume of oil in the prospect should also be big although just how big it could be is subject to much uncertainty. To quote a single exact estimate for the volume would be misleading in the extreme as it suggests that you are reasonably sure as to what might be there when you aren’t. It is better to quote a range of volumes lying between a minimum and a maximum with a most likely volume somewhere in the mid range.

The large uncertainties involved in defining oil prospects have led to an element of teasing at the expense of the exploration team. Exploration geologists are referred to as ‘arm wavers’ on account of their vague, yet expansive gestures whenever they are asked to describe an exploration concept. Engineers, more used to micrometer-exact measurements, will quickly become exasperated when talking to geologists.

An engineer once told me his theory that geologists couldn’t function at all if their hands were cut off.

‘How so?’ I asked.

‘Because every time I ask them a question they answer on the one hand it could be this, on the other hand it could be that.’

The small low-risk exploration targets are frequently located close to existing fields, where oil migration and the presence of reservoirs are almost assured. The large high-risk prospects, colloquially known as ‘elephants’, are often in frontier areas, perhaps hundreds of kilometres from the nearest oil field. Exploration managers are partial to elephants. If the drill bit finds oil in one of them, their glory day will have come. The small but promising-looking bumps around existing oil fields were once typically left unloved and ignored at the bottom of the exploration portfolio ranking list, but as the elephants have mostly been picked off in the North Sea, they are attracting more attention these days.

Having defined your oil prospect, you then need to persuade management and the oil company partners with a share of the exploration block that it is worthwhile spending millions to hire an oil rig to drill it. There is a greater element of salesmanship here. You give presentations at technical meetings and try and persuade all involved to part with the money to fund the well. It’s not too difficult if the prospect looks feasible.

On one occasion I helped to work up a North Sea oil prospect, yet ended up not rating the concept too highly as I reckoned there were too many ways by which oil could have leaked out of the structure. However, my French manager liked it on the basis that it could end up being a large oil field if everything worked in its favour. I presented the prospect to the technical staff from our partners in the exploration block and tried to sound confident. Our partners were sceptical and proved reluctant to commit funds to drilling the well. What happened next astonished me and I’ve never forgotten the experience. My French manager took over from me and refused to let the meeting finish until a positive decision to drill had been reached. He then spent the next three hours going over the arguments again and again. Air flights to London were missed, dinner engagements had to be cancelled, wives and husbands were leaving telephone messages, yet still he talked on. He eventually managed to grind everybody down into agreeing to fund the well.

I talked to him afterwards, congratulating him on what had been a remarkable performance. He didn’t think anything of it. ‘That’s what you do,’ he said and then he asked me if I knew what the French wordvolontémeant. The dictionaries translate the word into English as willpower, but as my manager explained to me, to himvolontémeant much more – you define precisely what you want and you never, ever give up until you get it, ‘Never, ever,’ he emphasised. For the record, the well was drilled years later and it didn’t find anything.

Not every oil find is commercial. The discovery may be too small or in much too complex a reservoir for there to be any chance of money being made. I once came up with an exploration prospect in the central North Sea that was drilled. The critical moment arrived when the geologist on the rig phoned through to our afternoon conference call in the office and announced that he had just seen oil shows in the sandstone returns from the drill bit. We cheered and cheered and cheered; our well had just come in. Unfortunately, it turned out to be a thin sliver of oil-bearing sandstone much too thin to be of any interest and that was all there was in the entire well. The remaining interval was solid mudstone for hundreds of metres below where the oil had been seen. We had carried on drilling in the hope that there might be a deeper reservoir interval but there wasn’t any to be found. The well is even listed as a discovery on some of the published maps of North Sea oil fields along with the name I gave the prospect. The drilling operation was what exploration managers like to call a ‘technical success’ – the well had found oil – even though in reality it proved to be a commercial failure.

Sometimes a sizeable oil or gas field is drilled by an exploration well only for the exploration team not to realise it. A surprising number of oil and gas fields in UK waters were overlooked for various reasons when they were first drilled. One geologist even coined a term for these: ‘undiscovery wells’. There are many explanations for this phenomenon, although bad luck and misjudgement are high on the list. Shell discovered one of the Gannet fields in 1969 but the well only penetrated the edge of the field finding a three metre oil column and not enough to get excited about.11The poor quality of seismic lines shot in the 1960s almost certainly explains this one. Even earlier, in 1967, Gulf Oil had drilled an exploration well into the centre of the Nelson field and found what is now known to be the worst quality patch of reservoir in the field. Gulf had also failed to notice that they had discovered the Morecambe gas field when they misinterpreted the well data. The discovery had been brought to their attention by the British Gas Council who had noticed the gas shows in the well whereas Gulf hadn’t. Gulf had by this time announced that were giving the block licence back to the government and when the Gas Council told them they had overlooked a major gas field, the American oil company immediately contacted the government and informed them that they had changed their mind. The UK government were not impressed and refused to allow Gulf to hold onto the licence. They later awarded it to a subsidiary of the British Gas Council.12

Sometimes a reasonable-sized oil pool is found far from any existing infrastructure and then ignored for years. Because of the distance involved, the development costs of building new infrastructure can be so expensive it would swallow up any subsequent profits resulting from putting the field on production. Size can be relative. A small oil pool offshore may be too expensive to produce from, whereas the same-sized pool onshore will make money. Drilling costs are at least 10 to 20 times less expensive onshore compared to those in offshore wells. For example, the cost to hire a semisubmersible rig for an offshore well is currently about $300,000 to $430,000 per day and as a rule of thumb you can double that figure to include the operating costs of using the rig.13By contrast, you can hire a land rig in the US for $14,000 per day.14

It’s a good idea to be the first to find oil in a new area, as you often find one of the biggest fields present there. The biggest fields get discovered first as they tend to be in obvious structures usually worth drilling. The field discoveries tend to get smaller and smaller after that. New fields are still being discovered in the North Sea; three fields came on the scene in 2010, the Catcher, Cladhan and Blakeney fields, although they are nothing like the size of the fields found in the early days. The last big field to be discovered in the North Sea was the Buzzard field in 2001, which is expected to produce over 700 million barrels of oil.

Once an oil field has been discovered, it gets a name. The bigger oil companies will usually follow a given theme in naming the fields they find. For example, BP named most of their North Sea fields after Scottish saints and the American oil company Conoco used the surnames of famous Scottish geologists; Murchison, for instance. The Nelson field was named in a flash of inspiration. The managing director of Enterprise Oil, Graham Hearne, was in his London office when he was asked what the company’s new field should be called. Glancing out of the window he spotted Nelson’s Column. ‘Look no further,’ he said.15

Shell name their fields after sea birds and by doing so created the biggest and longest enduring myth on the North Sea oil patch, endlessly recounted over pints of beer onshore and cups of coffee offshore. It was even mentioned once in theFinancial Times.16Auk was the first oil field discovered by Shell in the North Sea and a fairly small one by comparison to what came later. The story goes that Shell were not that impressed by the find and nondescriptly named the field A-UK, the A field in the UK. The second field to be discovered by Shell was found several hundred miles further north, a clear indication that plenty more oil fields were going to be found all over the North Sea. Alas, they couldn’t continue with their naming strategy. If and when they eventually got around to adding a sixth field to their North Sea portfolio, the name F-UK just wouldn’t do. Fortunately, Auk just happened to be a sea-bird, thus establishing Shell’s naming policy for the North Sea fields. The F field, when it came about, was called Fulmar.

I’ve investigated the story and can confirm it’s not true; some mischievous riggers probably made it up. Shell did indeed set out to name their fields after sea birds. The suggestion came from Myles Bowen, Shell’s UK exploration manager, who had been instrumental in the discovery of the company’s first North Sea oil fields.

2

The First Oil Fields are Found

THE FIRST GEOLOGIST to get a hint that there was oil in the rocks under the North Sea was Hugh Miller (the Miller oil field is named after him). Born in 1802 in the village of Cromarty, north of Inverness, he worked as a stonemason and taught himself geology after being fascinated by the fossil fish he had found while working in the quarries. He later wrote several books on the geology of the north of Scotland.

In his autobiographicalMy Schools and Schoolmasters, published in 1854, he describes his childhood in Cromarty and how he had become fascinated by a mysterious rock formation that lay under the North Sea offshore from the village. He would drag samples into a cave on the shore: