MOVE over North Sea oil. Here comes Foinaven, a huge new offshore oil and gas field that may rival Britain's No. 1 oil region, petroleum analysts say.
The new field is in the North Atlantic, beneath storm-tossed waters 120 miles west of Britain's Shetland Islands.
The British Petroleum Company (BP) has won London's approval to develop the Foinaven field where the company believes 500 million barrels of crude are lying under the seabed. Some time next year the first crude is expected to be pumped to the surface.
BP, working with the London-based Royal Dutch/Shell Group, is also actively interested in another field of similar size at nearby Schiehallion.
A further 90 prospecting blocks have been licensed so far. Analysts say that by using the latest technology, oil and gas companies will be able to exploit North Atlantic oil well into the next century.
David Basham, energy analyst with Kleinwort Benson, a London brokerage house, expects Britain's oil production to reach 2.8 million barrels a day in 1996. ``The area west of Shetland could be producing 500 thousand barrels a day in the next century,'' Basham says.
Among the contenders for exploiting the petroleum in the area is the New York-based Amerada Hess Corporation whose director of development, Rex Gaisford, says the North Atlantic field is viable now that new drilling and extraction techniques are available. But fully exploiting the field will be hard going, Gaisford concedes.
Deep water deposits
The oceans west of the Shetlands are among the stormiest in the world. Strong currents and gale-force winds combine to make drilling for crude and lifting it much more hazardous than anything encountered in the North Sea.
Also, petroleum and gas deposits lie in extremely deep waters. The Foinaven field is 1,500 feet beneath the surface - 900 feet deeper than any North Sea field.
BP plans to use a floating platform at Foinaven and will pump crude from the ocean floor into shuttle tankers.
Oil industry experts say advanced technology will make it easier to extract oil from previously difficult locations and transport it ashore. New equipment has been designed to enable pumping to happen on the seabed, instead of on oil platforms.
David Appleford, managing director of Alpha Thames Engineering, a London-based engineering firm, says his firm has developed a seabed pumping system that will make it possible for companies to exploit oil resources in areas previously considered unprofitable.
``Oil extracted in this way could be pumped up to 50 miles from the well head to an operational platform, then taken ashore,'' Mr. Appleford says. This would eliminate the extra cost of building deep-sea oil platforms because they could be located where the ocean is relatively shallow.
Exploitation of the North Atlantic oil and gas field will coincide with the forecast flattening out and subsequent decline of North Sea extraction. At present, oil output from the North Sea is approaching 2.8 million barrels a day.
Faroe Island Gas Field
Kleinwort Benson's Basham says development of Foinaven and other North Atlantic sites will ensure that overall production in areas around Britain remains at a high level. He notes that forecasts of how long North Sea reserves would last have been consistently conservative and thinks the same could apply in the North Atlantic.
Attention is also beginning to focus on reports that BP has discovered an enormous gas field close to the disputed fishing boundary between Britain and Denmark's Faroe Islands, which lie to the northwest of the Shetlands.
The reports, which BP refuses to confirm, say the field holds up to 5 trillion cubic feet of gas-condensate, which would put it on a par with some of the biggest North Sea fields.
Its closeness to the Faroes/UK fishing limit may give rise to political disputes about extraction rights. Another problem is the depth of the gas field: 2,400 feet beneath the surface.
As well as facing technical challenges, companies interested in the North Atlantic field are having to do some complex calculations to determine the profitability of such fields.
Amerada Hess's Gaisford describes crude in the area as poorer in quality than oil from most North Sea wells, and says this will reduce returns by up to $2 a barrel. Planning is going ahead on the basis that price levels will hold stable at close to current levels in the next few years, which would make large-scale exploitation profitable.
The companies are likely to benefit from lower petroleum revenue taxes than those that applied in the North Sea's boom years in the 1980s.
Last year, in a bid to encourage oil and gas companies to open up new fields, Britain softened the tax regime. Although this will reduce the amount of money flowing into the London exchequer, it improves the chances of the oil companies obtaining sizeable revenues from successful oil and gas strikes.