The North Sea is generally considered a high cost oil province; thus the price of oil and the cost of production are the two key parameters which will control its future production profile. A detailed study was carried out on more than sixty new fields in the Norwegian and the UK sectors. For each field, the investment intensity (Dollars per daily barrel) and the fully-built-up lifetime unit cost of production were estimated. The results cover a wide range but reach more than $30,000 per daily barrel for the investment intensity and more than $30 per barrel for the unit production cost. By comparing the costs with future oil price scenarios, it is estimated that the level of oil production in the North Sea could be between 3.6 and 5 million barrels per day in 1995 and between 1.6 and 2.9 million barrels per day in the year 2000. These production estimates include the incremental production from the new fields and the contribution from the existing fields. It is interesting to note that some high cost fields are undergoing development although the present outlook for oil prices may not justify their development. This may suggest three possible reasons: the companies investing in these fields anticipate higher future oil prices, they put a considerable emphasis on supply security and political stability in the North Sea, or they are hoping to achieve significant reduction in costs.

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