Today’s financial climate is not likely to give North Sea investment a boost, but according to Jim Hannon, managing director of Hannon Westwood LLP, the area is still a good bet for investors. “There are no excuses for not doing business here,” he said.

The Texas Alliance of Energy Producers and UK Trade and Investment (UKTI) held a workshop focusing on North Sea gas opportunities on October 29, 2008, at the Petroleum Club in Houston. The presentations were varied, but the message across the board was the same. Though the UK Continental Shelf has been in production for over 40 years, the area still has considerable potential.

Rob Toker, consul, head of trade and investment at the British Consulate-General in Houston, believes the trouble with North Sea investment is not prospectivity, but misperception about the difficulty of working profitably in the area. “The main problem we have in the UK is that we have the reputation of being overtaxed,” he said, noting that the tax rate in the UK is 50% and that the rate in Norway is 80%.

Today’s financial climate is not likely to give North Sea investment a boost, but according to Jim Hannon, managing director of Hannon Westwood LLP, the area is still a good bet for investors. “There are no excuses for not doing business here,” he said.

The primary movers and shakers in the North Sea, Westwood said, are super-majors, Shell, BP, and ExxonMobil. There are many additional operators working in the region, however, including 21 US companies and 14 Canadian operators. About one-third of the production from the region is gas, and the producible quantities are significant. The US Energy Information Administration says the UK North Sea contains an estimated 24.7 Tcf of natural gas reserves.

Westwood addressed some of the current obstacles to investment. “Our industry is in a pretty fickle state,” he said, “but we’re going to have to invest a lot more capital over the coming years to extract the reserves that we know are in place. It’s not below-ground issues that are a problem,” he said. “It’s aboveground.”

Marathon Oil UK Ltd. has addressed one of the aboveground issues – the challenge of bringing North Sea gas to market. Marathon’s answer is the Brae area fields (Brae Alpha, Brae Bravo, and East Brae), three interconnected platforms that lie 155 miles (248 km) northeast of Aberdeen. These installations act as a regional hub for oil and gas production and export from various Marathon and third-party operated fields and subsea tiebacks. Gas from the Brae area is piped to the St Fergus gas terminal via a tie-in to the Scottish Area Gas Evacuation pipeline system.

Brae Alpha is a single, integrated platform consisting of drilling rig and production, utility, and accommodation facilities in Block 16/7a, said John Connaway, engineering manager at Marathon. Brae Alpha topside facilities process produced fluids from the Marathon-operated South, Central, and West Brae (including Sedgewick) field reservoirs as well as fluids from the Birch, Larch, and Sycamore fields, which are operated by Venture. Talisman’s Enoch field was tied back to Brae Alpha in 2007.

Brae Bravo topside facilities process produced fluids from Marathon’s North Brae, Central Brae, Beinn, Bracken, and Crathes fields as well as fluids from the Kingfisher field, operated by Shell. And East Brae, a single integrated platform consisting of a drilling rig and production, utility, and accommodation facilities, produces fluids from Marathon’s East Brae and Braemar field reservoirs, Connaway said.

Some of the fields that have come onstream via Brae would not have been commercial without the hub, Connaway said, because the hub can process a broad range of hydrocarbons, from black oil to dry gas.

“There is a large and very flexible infrastructure, not only in the Brae Area, but through the North Sea,” Connaway said. That infrastructure will allow additional fields to reach production. “We’re looking for more companies interested in tying in.”

That infrastructure is invaluable, according to Chuck Hauf, president of Transocean subsidiary Challenger Minerals Inc. Infrastructure is going to be progressively more important as are self-installing platforms and normally unmanned installations. The region will also see more facilities sharing, Hauf said, because of the increasing requirement to develop marginal fields and to re-develop brownfields. “Collaboration is increasingly necessary.”

Hauf believes one of the forms collaboration will take is “rig clubs,” groups of operators that collectively lease a rig to save costs on their drilling programs. There are a lot of small operators in the area that are drilling relatively few wells, he explained. Those operators will need rig clubs. “I think you’re going to see a lot more of them.”

There is no doubt that innovation will be the name of the game across the board going forward. New types of collaboration and advances in technology will help to draw out the valuable resources in the are, but timing is everything.

“The North Sea can’t wait for people to create strategy,” Westwood said. “The best thing is to get busy.”