Twenty years ago, offshore exploration presented an Immense technological challenge to the industry Thanks to the exceptional ingenuity and dedication of those involved, the North Sea has been an outstanding success story.
However, In many ways the story has only just begun The challenges ahead are far tougher than those we have already encountered The North Sea remains one of the most exacting, expensive areas for development In the world We face a future of uncertain oil prices, with the average real price of oil not expected o increase significantly In the near term. We are under tremendous pressure to reduce costs further The need to maintain the highest level of safety and environmental acceptability has far reaching implications, particularly In the light of the Cullen Enquiry And all this against a background of steadily depleting resources
And yet, all those eager to write us off as a sunset industry couldn't be further from the mark We have confounded the skeptics. In the past and I am confident we will do so again. The history of the North Sea has been characterised by outstanding courage, innovation and skill I am sure the future will be the same
This conference has chosen as its theme ‘Fitness for Purpose’ That, In a nutshell, is the challenge ahead. To undertake focused, streamlined, well-resourced activity fitted to the constraints and opportunities which exist Two overriding factors dominate the picture. First, tough economic constraints. Environmental pressures impacting upon energy consumption and resulting in greater energy efficiency may well support Shell's view that we cannot expect sustained prices above $20 a barrel in the coming years Overall growth in global oil demand in the 1990s of 1 to 2 per cent per annum is probably a reasonable projection That means that whatever we do has to be as efficient and cost-effective as possible Long gone is the bold ‘gung-ho’ attitude to spending following the first oil price shock of 1973 We simply cannot afford to solve problems by throwing money at them as we did then Second, we need to take a realistic approach to prospecting In the llght of depleting resources There is no question but that the UK will be self-sufficient In oil and gas well beyond the turn of the 21st century, but the days of the massive Brent and Forties fields are gone.
We need to look again - and are doing so - at the smaller pockets of reserves - In the 30 to 50 million barrel range - which we would previously have passed over as uneconomic or inaccessible. We will need to be increasingly inventive and thorough, using the most cost-effective drilling and stimulation methods to get at these less accessible yet valuable reserves - and all, of course, in as safe and environmentally sound a way as possible No one said it was going to be easy.