Abstract

The main drawback to North Sea exploration is the uncertain price situation.

There has been talk of leveling-out of North Sea gas prices at about 3 pence per therm (30 cents per thousand cubic feet). However, this is an undesirable situation because Dutch onshore gas brings about 3.6 pence, and the selling price of gas to British householders is about 25 pence. It is believed that the operators are working on a cost-plus basis without allowance for oil they don't find. North Sea drilling is expensive and this method does not appear to be the proper way to handle sales.

While only small quantities of oil have been produced in offshore exploration to date, this does not rule out the possibility of subsequent significant discoveries.

Several reasons are cited why the North Sea had not previously produced oil. These are: (1) the geology of the North Sea area has been known for many years and the rocks looked good, but. onshore work yielded only small oil fields; the increased costs of offshore work just didn't look economical, (2) there has been, and still is, trouble over just who owns the minerals in the sea, and (3) the offshore production business came into being within the last twenty years, mostly through American work in the Gulf of Mexico. However, unlike the Gulf, the North Sea is a real nasty place to work. Winter lasts almost eight months and is very unpredictable. Also, big rises and falls in waves make diving operations almost impossible, and can raze the seabed from under stationary-type drilling rigs.

Despite all the minuses in North Sea exploration, the fact still remains that large quantities of gas have been located and others still remain to be found.