Select Committee on Trade and Industry Appendices to the Minutes of Evidence


APPENDIX 40

Memorandum by Anton Ziolkowski, Professor of Petroleum Geoscience, University of Edinburgh

THE PROBLEM OF BRITAIN'S SOURCES OF PRIMARY ENERGY

SUMMARY

  Britain faces severe energy problems within the next decade. Some of these problems may be solved within the current framework and the PILOT vision. Other problems may not be solved unless the Government takes action on its own. Specific issues that fall into this category are the problem of exploring the UKCS west of the Hebrides and the location of by-passed oil in existing fields.

BRITAIN'S PRIMARY NON-RENEWABLE SOURSES OF ENERGY

  The current position for production of oil, gas and coal in the UK is as follows:

Oil

  The DTI Development of UK Oil and Gas Resources 2001 gives 2000 UK oil production at 126 million tonnes (a decline of 8 per cent from 1999) and proven plus probable reserves of oil as 1,010 million tonnes. The reserves-to-production ratio for the UK is thus about eight years. The rate of discovery of new reserves is declining and not keeping pace with the consumption. On present trends we must expect to become net importers of oil within about eight years.

Gas

  Consumption of gas in the UK is increasing, particularly for the generation of electricity. The DTI states that UK gas production in 2000 was 115 billion cubic metres, while proven plus probable reserves were 1,195 billion cubic metres. Reserves to production ratio is thus about 10 years. We are already beginning to import gas (1 per cent in 1998, 1.3 per cent in 1999).

Coal

  BP Statistical Review of World Energy June 2001 contains figures that show UK coal production is now only 19.5 million tonnes of oil equivalent per year (compared with 56.4 million tonnes in 1990) and is declining at more than 10 per cent per year. UK coal is facing stiff competition from abroad (imported coal now accounts for almost 50 per cent of our consumption) and from gas. When uneconomic pits are closed down, they usually fill with water, the unmaintained roadways tend to collapse, and the reserves they accessed are sterilised. On present trends we would expect to see the end of coal mining in the UK within about 10 years, and all the UK coal reserves sterilised.

ECONOMIC CONSEQUENCES

  If nothing is done to extend the life of our coal and hydrocarbon energy sources, we will soon have to import the bulk of our primary sources of energy in the form of oil, gas and coal. We will have to pay for the imports with exports. This will essentially be a huge tax on the people of these islands and will result in a reduction of living standards.

  In the light of these difficulties, an increase in nuclear power generation of electricity is regarded as essential. Of course, nuclear power is not a substitute for oil, and the problem of nuclear waste disposal has not been solved. Other alternative sources of energy are not able to fill the anticipated gaps in Britain's energy needs within the time frame that we expect to face these problems.

WHAT CAN BE DONE ABOUT BRITAIN'S HYDROCARBON RESERVES?

  Extending the life of the UK's non-renewable energy resources is clearly critical to the future of the UK economy. The Government's view is that this must take place as a co-operation between Government and industry, with PILOT as the main forum for this co-operation for the oil and gas industry. While PILOT is addressing many of the major issues, there are aspects of the situation that I feel should deserve more attention from the DTI.

Exploration in the Atlantic Margin

  The area of the UK Continental Shelf west of the Hebrides is vast: bigger than the whole of the UK sector of the North Sea (see attached map). Much of this area has the same potential for hydrocarbon accumulation as the North Sea itself, but is largely unexplored. Exploration is hampered by the presence of basalts, formed during the opening of the North Atlantic, and covering the underlying Mesozoic sediments and possible oil-bearing structures. Current seismic methods are unsuccessful at delineating the structures beneath the basalt and provide little or no information on which to plan a drilling programme. Drilling is therefore extremely risky. Without good seismic data, the probability of drilling dry holes is enormous.

  Several oil companies, notably Conoco and Phillips, have spent considerable sums in trying to solve the problem of seismic sub-basalt imaging. They have met with some success, but not enough to plan a successful drilling programme, and are giving up. Other companies are interested in this area, but are not investing heavily in research to solve the problem. The risk is too great. Investment can reap better rewards in other parts of the world. This is clearly an issue where the British national interest and the interests of the oil companies do not coincide. In such a situation, I believe the DTI should be proactive and commission research to solve the problem, creating a realistic budget of say, £10 million a year, to fund the research.

Locating By-passed Oil and Gas in Existing Fields

  There are oil reserves in small fields that are currently uneconomic to develop. There is also by-passed oil in existing fields. These two kinds of reserves, both known as "possible" reserves are different. The exact locations of the by-passed oil "puddles" in existing fields are not precisely known. If they were known, it would not be expensive to produce the puddles, given the present infrastructure. On the other hand, the locations of the reserves in small fallow discoveries remote from existing fields are known, but the problem is the high capital investment to produce them. There are billions of barrels of by-passed oil in existing UK fields. The prize is therefore enormous.

  The location of by-passed hydrocarbons in existing fields is a technical problem.

  Hydrocarbon reservoirs are partitioned, and the existing infrastructure produces oil from some of the partitions, but not all. Small partitions within the reservoir are often difficult to detect. The resolution of conventional seismic reflection data is simply not good enough to find them. One approach is to try to improve the resolution of conventional seismic reflection data. This is what the industry has been doing now in the North Sea for nearly four decades. Step-change improvements in current techniques are unlikely to occur.

  However, a step change in seismic resolution could be obtained by using seismic sources and receivers in wells already present, or in new wells drilled especially for the purpose. The reason this would work is that the sources and receivers would be much closer to the target. At least a factor of ten increase in resolution is achievable at the reservoir level (Ziolkowski, 1999). The technology to achieve this is well understood, but has not been developed. If the technology already existed, the incentive to use it in existing fields would be enormous.

  However, there is no off-the-shelf multi-well seismic-imaging technology. The hardware for the instrumentation of the wells exists, but the cost of developing the complete technology is of the order of £10 million. As a candidate for investment, this particular technology is not high on the list of any major oil company: competing candidates, mostly in other oil provinces in the world, are higher on the list. This is another issue where the British national interest and the interests of major oil companies do not coincide and it is a clear candidate for a separate development budget.

RECOMMENDATION

  A number of research groups in the UK are very interested in the problem of sub-basalt imaging, including Cambridge and Leicester Universities, the British Geological Survey and Veritas DGC. At the University of Edinburgh, in collaboration with colleagues in other institutions and in companies, we have been making a little progress in the problem of sub-basalt imaging (Ziolkowski et al, 2001). The concept of multi-well seismic imaging has been studied by a number of research groups and companies around the world, particularly in the United States, but it suffers from lack of investment. These two problems are much too important to be left to the enthusiasm of a few poorly funded academics and the hope that some oil companies might change their worldwide investment priorities. There should be some serious Government investment to get these problems solved in the national interest.

REFERENCES

  Development of UK Oil and Gas Resources, 2001, The Stationery Office.

  BP Statistical Review of World Energy June 2001, BP plc.

  Ziolkowski, A M 1999, Multi-well imaging of reservoir fluids: The Leading Edge, 18, 1371-1376.

  Ziolkowski, A, Hanssen P, Gatliff R, Li X-Y and Jakubowicz H, 2001, The use of low frequencies for sub-basalt imaging: Expanded Abstracts Seventy-first SEG Meeting, 9-14 September, San Antonio, p 74-77.





 
previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2002
Prepared 27 August 2002