The North Sea environment is one of the most hostile in the world and yet has, in the past (and future?), offered some of the most attractive geological prospects available outside of OPEC and Russia. Questions confronting many explorers today are addressed towards the issues of "just how good is the North Sea"?

Obviously, certain areas have reached an exploration maturity cycle that downgrades the potential for huge discoveries. Other areas are virtually untouched, holding huge potential -- yet in deeper water and more severe environments. The bottom line seems to be an economics issue -- can smaller structures in mature areas afford attractive economic returns? Can even large reserves prove economic in the more hostile, yet invitingly unexplored, territories?

This paper attempts to pull together many of the recently published information items on the North Sea, in order to get an overall perspective that will address some of the pros and cons of exploring with these uncertainties. Operating environment, costs, oil reserve potential, contract and tax issues for the North Sea are presented and compared against other proven, producing areas such as Indonesia and Egypt. Project economic issues and trends for the North Sea are discussed for existing as well as new, yet-to-be-made discoveries, with emphasis on the category of "marginal fields".

Some trends also are examined in the UK, Norway and world energy markets; and extrapolations are made as to how these might affect the national economies of the UK and Norway -- and especially how these factors might influence their perspectives toward economic incentives within the private oil industry sector. Conclusions are drawn concerning 1) the many positive aspects of the North Sea areas and 2) some of the not-so-positive features -- such as the onerous taxation structures and disincentives companies face today in those areas.

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