OGA publishes strategy outlining a plan to maximise recovery of tight gas in the Southern North Sea

OGA has published a strategy outlining its plan to maximise recovery of tight gas (i.e. gas recovered from low permeability reservoirs) in the Southern North Sea (“SNS”). A Joint Industry Project commissioned by Oil and Gas UK in 2015 with the purpose of developing an understanding of the remaining potential within the SNS found that a substantial volume of tight gas remains within existing producing gas fields, undeveloped discoveries, and prospects.

It identified that at least 60% of undeveloped and 50% of known prospects in the SNS are considered to be tight gas accumulations. OGA estimates there is around 3.8 trillion cubic feet (“tcf”) of remaining tight gas accessible within the SNS. The strategy published by OGA has the aim of unlocking this remaining tight gas potential and, in doing so, supporting OGA’s strategy of Maximising Economic Recovery for the UK (“MER UK”). The strategy should also further OGA’s objectives and priorities within the Corporate Plan 2016-2021.

Background

The SNS is a mature offshore gas basin, which has produced around 40 tcf since it first began producing in 1967. The basin continues to produce around 1.3 billion cubic feet/day across a number of producing gas fields. OGA has said that tight gas reservoirs have frequently been disregarded as high-cost, high-risk developments and licence holders have typically focussed their resources on less complex, lower-cost, lower-risk developments with higher recovery factors. In recent years, however, technological advances have enabled successful tight gas offshore developments to take place in the SNS. These developments have the ability to extend the economic life of the remaining infrastructure and to stimulate field redevelopments, as well as marginal pools. The developments may also stimulate activity in the local supply chain and help build local capability and expertise in tight gas. The strategy by OGA aims to maximise these opportunities and benefits.

The eight-step programme

OGA has identified a range of activities which are to be implemented in order to deliver the tight gas ambition. These activities have been categorised into an eight-step programme but, in summary, largely focus on integration, collaboration, knowledge-sharing, technology development and improving economics.

• The first step relates to existing tight gas developments wherein OGA looks to promote integrated programmes of work and sharing of best practice amongst operators in the SNS who are progressing tight gas developments in the short term.
• As a second step, OGA looks to mirror the first step, but this time in relation to those who are going to be progressing tight gas developments in the medium term.
• The third step is concerned with workgroups and industry partnerships where OGA hopes to establish and work alongside relevant industry workgroups and operators who have a specific interest in promoting tight gas developments.

• The fourth step focuses on the development and deployment of technology where OGA, through coordinated feedback from industry partnerships and workgroups, emphasise the seizing of technology development opportunities that may promote future tight gas opportunities.
• The fifth step relates to knowledge sharing and best practice. OGA looks to promote the sharing of knowledge amongst operators with an interest in tight gas including the development and maintenance of a tight gas best practice document to be made publicly available through OGA’s website.

• As a sixth step, OGA wishes to encourage coordination of the supply chain to ensure it is aligned with operator priorities and potential SNS developments.

• The seventh step relates to creating value and improving economics by establishing new benchmark data for SNS drilling costs and categorising tight gas development risks.
• Finally, the eighth step deals with communication and stakeholder plans and aims. Here, OGA seeks to raise the profile of tight gas opportunities within the SNS by coordinating a communication plan with relevant stakeholder engagement.

Engagement with other OGA programmes and the industry

OGA recognises that the success of its Tight Gas Strategy is dependent on engagement with existing OGA programmes and with industry. In particular, OGA draws attention to its Asset Stewardship Strategy (considered in our previous Law Now), Technology Strategy, and the MER UK Strategy and Task Forces. A special interest group, the “SNS Rejuvenation”, commissioned through the East of England Energy Group in conjunction with OGA, will be responsible for implementing much of the priorities of the eight-step programme. The SNS Rejuvenation terms of reference include the requirement to commission a Tight Gas Work Group; the Tight Gas Work Group will develop a budget and work programme in line with OGA’s eight-step programme. Alongside the SNS Rejuvenation and Tight Gas Work Group, engagement from operators and the supply chain will be vital to the success of the strategy.