The Danish North Sea Fund judging the 7th Concession Round as an opportunity for defining the future of Danish offshore industry.

The Danish Energy Agency received 25 applications for the 7th Concession Round. That is the highest number ever, and a considerable step up from the 16 applications received for the 6th Round. The areas offered comprised partly all free areas of the Centralgraben where the majority of the Danish fields have been found, and partly areas further to the east, where a discovery was made as a result of the 6th Round. This distinct interest is pleasing the Danish North Sea Fund, which on behalf of the Danish government is acting as a 20%-partner in all concessions, thereby being the third largest producer of oil and gas in Denmark.

“The 7th Concession Round is interesting in many ways, and we are pleased to see that the group of applicants consists of partly a mixture of companies which for many years have taken part in the activities in the Danish North Sea, and partly new ones bringing with them new experience. That is not bad at all, and, furthermore, the concession round has shown that more people than me believe in the potential of the North Sea – a fact providing for some interesting opportunities,” states Peter Helmer Steen, CEO of the Danish North Sea Fund. He estimates that something like 13.5 billion barrels of oil and 500 billion m3 of gas have been discovered in the existing Danish fields. In 2042, based onexisting technology, production from these fields is expected to adds up to a grand total of 4.2 billion barrels of oil and 250 billion m3 of gas, so one of the major hurdles is to raise the percentage of recovery.
“It is absolutely decisive that we can make use of these resources by producing more than just the present 25-30% of the oil waiting for us in the underground. That will earn billions of DKK to Denmark as well as to the concession holders, but to achieve that we shall have to apply new knowledge and new production technology. That will provide the new Center for Oil and Gas – DTU with a key position as they are to develop new technologies and train people to use it,” explains Peter Helmer Steen who together with the other partners of the Danish Underground Consortium has provided the money for the new center.

ABLE TO EXPLOIT NEW DISCOVERIES

Expected technological advances combined with the significant interest in the 7th Concession Round tell of faith in the future, and as a consequence the Danish North Sea Fund wishes to take a more nuanced look upon the future structure of the Danish offshore industry.

“We have made a reasonable guestimate of how much oil and gas there is in the underground, and, actually, there are huge deposits of oil. Now, it is our job to see to that as much as possible of the resources already spotted are recovered, and then we shall locate the rest.

After that it is a question of ensuring that when somebody strikes oil or gas, we are able to produce it, and to that purpose we shall arrange for a better infrastructure – an investment amounting to several billions of DKK,” informs Peter Helmer Steen who is going for a number of principal solutions.

“The Tyra-field, for instance, in a few years will need a renovation. That will be a relevant opportunity for taking a look at how the entire production system in the North Sea should look. The renovated infrastructure is to last for the next 30-40 years, so it is a subject which the government as well as the oil companies should strongly consider. How can we arrange that new companies are able to pipe their oil and gas ashore, and how can they do it in a cost-efficient way?” asks Peter Helmer Steen in a rhetorical way.

DECISIVE FOR THE DANISH SHELF

The plans of more frequent concession rounds may attract even more new companies, so to maintain that interest it is important that the costs of production are lowered as much as possible. “It is of paramount importance for the future of the Danish shelf that we create an interest in producing even minor discoveries and see to that production starts up fast. A most decisive factor is that we cut down the costs of introducing the various standards, but that requires disciplined operators who can cut to the bone when their employees turn up with costly proposals that may be nice, but not needed, to apply. At the same time the installations in the North Sea, naturally, must meet reasonable requirements in order not to be prohibitively expensive to install. That is why it is a positive step that a cooperation has been initiated between the government and the industry to find a national strategy. In my view that is the most interesting thing that is happening in the oil and gas industry at the moment,” sounds the concerned words from Peter Helmer Steen who – like the rest of the Danish offshore industry – will follow the development of the national strategy with intense interest. The two-pronged Danish energy policy, calling for Denmark by 2050 being independent of fossil fuels and the Danish resources of oil and gas being used to the highest possible benefit by the Danish society, means that the stage has been set for a most defining year for the Danish offshore industry. And Peter Helmer Steen is of the definite conviction that this industry will be needed for many years to come.

“Long after 2050 the world will need oil and gas. It will be an advantage for Denmark to meet this demand by Danish production. The value of the Danish resources is to secure the Danish welfare and the “green conversion”. So 2050 will not be the end for exploration and production of oil and gas here in Denmark.”

Forlaget Camae 2014-2015. All rights reserved. Subject to typing and printing errors. All prices exclude VAT unless otherwise stated.