After 50 years in the North Sea Maersk Oil is still prepared to play its part, even if it will be increasingly challenging to extract the barrels.
For more than five decades Maersk Oil has been playing the leading part in the Danish sector of the North Sea in which period a dramatic development has taken place. The development has not only played a significant part for the company, but for Denmark, too. And Patrick Gilly, Managing Director of Maersk Oil DBU, believes that the Danish oil and gas industry maintains a very promising future.
Q: Maersk has played a significant role throughout the 50 years that have passed since the first findings of hydrocarbons in the North Sea – how has that role shaped Maersk?
A: Over the past 50 years, Maersk Oil has driven the exploration, development and production of the oil and gas reserves in the Danish North Sea on behalf of the Danish Underground Consortium. During these years we have constantly pushed the limits and have gained extensive experience and know-how related to complex chalk fields.
On behalf of the DUC Maersk Oil now operates 16 fields, 52 platforms and around 400 wells. Our facilities are aging and the reservoirs maturing which makes the operations increasingly challenging, but with more than 50 years’ experience we are very well positioned to overcome these challenges while maintaining our efforts to maximise production in the safest and most efficient manner possible.
The learnings from the Danish North Sea have enabled Maersk Oil to expand our geographical footprint and to successfully tackle similar challenges in other parts of the world.
Q: What has been the most important for the development for the North Sea throughout that period?
A: Since the first discovery of hydrocarbons in the Danish North Sea in 1966, 2.3 billion barrels of oil and 202 billion cubic metres of gas (equivalent to 1.5 billion barrels of oil) have been produced, so it goes without saying that we have tried and learned a lot along the way. We have been continuously investing in developing new technologies, skills and capabilities. In collaboration with partners and suppliers we have been part of game changing decisions and behind the innovation which together have enabled us to develop a successful upstream industry.
The technological advances that we have made as an industry, such as our implementation of horizontal drilling in 1987 and the intensive use of water injection in low permeability reservoirs, have played a key role for us.
By drilling water injection wells parallel to the oil producing wells, we increase recovery by using the injected water to both maintain “energy” in the reservoirs and “sweep” the oil out of them. As you might imagine, water injection becomes increasingly important as the fields mature and pockets of “unswept” oil become more and more complex to recover.
That is where another technological advance stands out to me. 4D seismic surveys, which give us a way to better understand the remaining potential in the reservoirs. It allows us to identify how the reservoirs have dynamically responded to the existing developments and to know how and where to adjust those developments to reach the oil or gas yet to be extracted.
So, technology has played a very important part in getting us to where we are today, and I am convinced that it will also be technology – and new innovative solutions – which will take us even further.
With the recent drop in oil prices and the lower-for-longer expectations I believe that working together across the industry on matters regarding innovation and technology will help us all become even safer and more cost-efficient and thereby ensure our joint future. This is also the reason why Maersk Oil and our partners in the DUC are continuously investing in the development of innovative technological research for instance through our 1 billion kroner investment in the Danish Hydrocarbon Research and Technology Center.
Q: Production of oil and gas has contributed significantly to the Danish society economically speaking – how does Maersk see its own role here?
A: There is no doubt that the oil and gas industry has played a significant role for the Danish society over the years and the contribution can be summed up under three main headlines; tax payments to the Danish state, jobs and security of energy supply.
Over the years the industry has paid a total of more than 400 billion Danish kroner in taxes to the Danish state and Oil Gas Denmark estimates that more than 15.000 people are either directly or indirectly employed in the industry. Those numbers speak for themselves.
Furthermore the production from the Danish North Sea reduces Denmark’s dependence on other countries by providing a reliable supply of energy. At Maersk Oil we are of course proud of the role we play in the matter.
It is essential for me to emphasize that the resources that Denmark has in its backyard belong to the Danes. The company and our employees take great pride in operating the fields on their behalf and making the most of it to the benefit of all.
Q: Looking back it is only natural to evaluate status quo and look ahead – what does it take to continue production?
A: We need to continue the technological development and innovation in order to maintain production and maximize the value of the mature fields in the Danish North Sea. I expect to see new solutions coming out of for instance the DHRTC which will enable us to increase the recovery rate even further. For us as an operator, innovation is fundamental in order to maximize production. It supports us in adapting to the challenges of the economic environment and it helps us drive down costs and increase safety – all of which are and will remain key priorities for Maersk Oil.
Another essential element is cross-industry collaboration. In a lower-for-longer oil price environment it is important that we up the collaboration and the knowledge-sharing across the industry. We can definitely all benefit from learnings and support each other in securing our joint future. We fully acknowledge the experience that our DUC partners and our suppliers of services and materials possess and we make sure to leverage the synergies that the industry represents.
Q: How do you see the future for the North Sea?
A: The Danish Energy Agency estimates that there is still 1.4 billion barrels of oil equivalent in remaining potential in the Danish North Sea. That is approximately 40% of the total historic production, which equates to around 56 years of consumption of natural gas in Denmark. So there is still a lot of potential out there that we can benefit from as a company, as an industry and not least for Denmark as an oil and gas producing nation.
It becomes increasingly challenging to extract the barrels as the fields and facilities mature, but at Maersk Oil and the DUC we are ready for that challenge. The complexity out there requires experience and we put in a lot of effort to identify and produce every barrel in the safest, most efficient and least environmentally impactful manner. I am convinced that the Danish oil and gas industry maintains a very promising future.