Black Gold of the North Sea

“It’s only gas,” said the geologists. And wow, were they ever frustrated…

The year was 1959. The geologists were in the Netherlands, near a small town named Groningen, at the southern edge of the North Sea. They worked for Shell and Esso (now Exxon Mobil) and were drilling a well. Instead of oil, however, the drill bored into a massive deposit of natural gas. All that hard work and expense for a disappointing find of natural gas.

But the politicians of Europe weren’t so disappointed. They soon sat up and took notice, because…

With further drilling near Groningen, it became clear that the Dutch gas field was gigantic. We now know that in its early days, the Groningen field was the largest gas field in Europe. In fact, it was one of the largest gas fields ever discovered anywhere in the world, holding over 100 trillion cubic feet of natural gas. Today, that would be enough gas to supply the entire U.S. natural gas market for almost five years. Back in 1959, it was enough gas to last the Netherlands more than a century. Indeed, the gas of Groningen paid for much of the economic development of the Netherlands in the 1960s, turning a relatively poor nation into one of the wealthiest nations in Europe.

Furthermore, the geologic evidence from Groningen was enticing. The rock that held the gas was sandstone, but not just any sandstone. This rock was deposited in an ancient desert. The rock cores and seismic work actually showed the giant sand dune structures. And based on the regional structure, it looked like the sand dunes extended far out beneath the then-unknown North Sea. Was there more energy wealth out beneath those choppy waters? A great race was on.

Nations Staked Their Claims to Subsea Riches

Almost immediately, the nations bordering the North Sea began a complex legal process of claiming and allocating the mineral rights beneath the rough waters offshore. In keeping with their historically assertive Viking heritage, the Norwegians were in the forefront.

By the early 1960s, Norway struck agreements with the United Kingdom, Sweden, Denmark and Germany. And the boundary agreement that Norway struck governed the economic and industrial fate of that nation for the rest of the 20th century. In fact, the North Sea boundary division will probably control Norway’s fate for several centuries into the future.

The North Sea Made Norway Wealthy

That division of the North Sea in the early 1960s turned Norway from an economic backwater into one of the wealthiest nations in the world.

But just owning hydrocarbon deposits beneath hundreds of feet of water, and thousands of feet of rock, is not enough. You have to be able to exploit your riches. And that’s what happened in Norway. It’s quite a tale, and better yet, it’s something in which we can invest.

The Explorers Arrived and Found Texas (Three Times)

By 1966, the world’s oil explorers were arriving in Norway. They were looking for oil, and the North Sea is a big place to search. Norway’s territorial waters, including the Barents Sea in the north, cover an area about three times the size of Texas.

Everyone who understood the challenge knew how tough the exploration job was going to be. According to a historical account published by the Norwegian Ministry of Foreign Affairs, people in and out of industry described the North Sea as “the world’s harshest exploration area for oil and gas.”

The development of Norway’s oil riches involved considerable trial and error. At every step, people had to adapt exploration concepts, seagoing platforms, drilling equipment and production facilities to the challenging environment of the North Sea. By 1971, the first barrels of oil flowed to the surface of a massive steel and concrete platform called Ekofisk, operated by Phillips Petroleum and located entirely within the Norwegian sector of the North Sea. The Ekofisk complex is still producing oil today, almost 40 years later.

North Sea Technology Laboratory – for the Chosen Few

The North Sea quickly acquired a reputation as a laboratory for developing offshore oil and gas technology. The big difference between large land-based projects and offshore development is that the offshore installations are hidden from people by the sea. Only the chosen few who build and work on the platforms can truly experience how far the boundaries of technology have been stretched to pump oil and gas from the depths beneath the ocean.

Initially, the equipment and know-how for offshore development came from outside Norway. But over time, Norway built up competencies and technologies adapted to the special conditions of its continental shelf. The linchpin of North Sea development was technology to build massive structures called “Condeep platforms.” These are the gargantuan steel and concrete production platforms that, if placed beside the world’s largest and best-known buildings, would dwarf the Eiffel Tower and even the Empire State Building.

Until we meet again,
Byron King

June 15, 2009