* Pending platform closures will leave oil in ground
* Some 4.88 bln barrels at risk of stranding
* Small offtake agreements not a priority for oil majors
By Claire Milhench
LONDON, July 5 (Reuters) - Britain must get tough with majoroil firms that prevent smaller producers from getting access toplatforms and pipelines, or risk leaving as much as $500 billionworth of oil in the ground, North Sea oil companies say.
Output from the North Sea has been in steep decline asmature fields are exhausted and global firms such as BP and Shell focus on more promising projects elsewhere.
But there is still oil under the sea bed that a host ofsmaller operators is keen to extract, and Britain'scash-strapped government is anxious to maximise tax revenues.
The problem is, many small producers lack the infrastructureto get their oil to market and need access to platform hubs andpipelines owned and operated by the big oil companies. And muchof that infrastructure is coming to the end of its working life.
Helping small rivals, however, is at best a low priority foroil majors, and at worst unprofitable and not in their interest.
"It's more of a headache than anything else," said StephaneFoucaud, managing director at research and analysis firm FirstEnergy Capital. "They (oil majors) want to exit the North Sea,so dealing with small offtake agreements is not a priority."
The industry's infrastructure code of practice is meant tohelp smaller players bring new fields onstream that requireaccess to third party platforms and pipelines. That oftendoesn't happen, according to industry insiders.
"We look for owners of infrastructure to market it ... anduse it for the greater good, but there is a variation in that,"said Simon Toole, head of licensing exploration and developmentat Britain's Department of Energy & Climate Change (DECC).
RETIRING PLATFORMS
Time is running out. By the middle of the next decade, overhalf of existing North Sea infrastructure will be decommissionedor no longer available for use.
Consultants Hannon Westwood estimate some 4.88 billionbarrels of oil equivalent (boe) in recoverable reserves, worthsome $500 billion, are at risk of being stranded as a result.
"Decommissioning has been pushed back but it does need tostart happening," said Philip Whittaker, an associate directorat the Boston Consulting Group (BCG). "We are reaching the stagewhere some assets need to be retired for integrity reasons."
Shell has plans to decommission some of its Brent facilities- the Brent Delta platform ceased production in December 2011,with Brent Alpha and Bravo scheduled to do so in late 2014 andBrent Charlie in late 2015.
Hannon Westwood also estimates the Bruce platform will begone by 2018, stranding 57 million boe in recoverable reserves,Cormorant and Ninian will be gone by 2023, stranding 83 millionboe, and Magnus will be gone by 2024, stranding 140 million boe.
"In certain areas there are quite significant volumesassociated with 30-year-old platforms, so we need to acceleratethe exploration and development," said Oonagh Werngren, head ofoperations at industry body Oil & Gas UK. "We need to change theway we do things."
The older the platform gets, the more expensive it becomesto maintain and the risks of a damaging leak rise. For operatorslooking to limit risk after BP's Macondo oil disaster in 2010,there is little appeal in opening up battered platforms.
Small producers allege infrastructure owners sometimes tryto deter them by setting their tariffs too high. But an officialat one major infrastructure operator, who declined to be named,said tariffs were not the issue.
"There are some fields that it may be possible to developfrom a technical point of view but they just don't make economicsense - they are too small or too expensive to develop," hesaid. "The infrastructure owner shouldn't be expected tosubsidise new fields which are not commercially viable."
FRUSTRATION MOUNTS
The UK government has just commissioned an independentsix-month review of North Sea oil and gas to try and addresssome of these issues. Industry groups are also racing toidentify ways of removing the barriers to development.
But producers are so frustrated over the amount of time ittakes to bring new fields on stream, that some are calling onthe DECC to get tougher with infrastructure operators.
Speaking at a Society of Petroleum Engineers conference inLondon in May, Mark Tandy, commercial and exploration directorat Taqa Bratani, voiced his desire for DECC to step inand force parties to come to an agreement if necessary.
"The time it takes to get agreement erodes the value," hesaid. "No one likes to be forced but sometimes the parties needtheir heads banging together."
Tandy said that a new commercial agreement drawn up for thedevelopment of the Cormorant East oilfield needed consent from120 different entities. "That's a lot of paperwork and it's nota practical solution," he said.
Another producer, who declined to be named, also wanted tosee regulators take a stronger lead, arguing for some level ofenforcement to help bring on new oil.
