* Wood Review highlights 6 areas for technology focus
* New regulator expected to work with oil start-ups
* Enhanced Oil Recovery key to getting final barrels out
By Stephen Eisenhammer
LONDON, Feb 25 (Reuters) - "Nodding donkeys" floating atsea, water injection, and "outside-in" subsea oil taps that canwithstand the pressure found in the chamber of a firing gun aresome of the technologies vying to keep the oil pumping inBritain's North Sea.
Britain's government is now planning to push companies toembrace new technologies to stem a decline in oil recovery whichhas seen production from the UK Continental Shelf fall 40percent in past three years.
The Wood Review, Britain's first strategy assessment of itsoil and gas potential in more than 20 years, was published onMonday, and the government immediately implemented itsrecommendation to create a new regulator.
The review also called for nurturing technology throughindustry work groups supervised by the regulator, and placing anincreased responsibility on operators to develop, install andshare results of using new technology.
The report stressed finding new ways of getting more oil outof reservoirs, reducing the cost of dismantling infrastructurelike platforms and pipelines, improving exploration, makingtraditionally unviable small fields economical, and operatingunder high temperature, high pressure (HPHT) conditions.
Small firms which tend to lead this innovation complainoften of the challenges of having their technologies accepted bythe wider industry, so how Britain's new regulator will pushinnovation will be crucial.
MARGINAL FIELDS
One such company is UPB, which is trying to transform NorthSea recovery with an unmanned oil producing buoy which worksmuch like the onshore "nodding donkeys" typically seen in theTexan desert. It costs two thirds less than the closestalternative and can operate at a cost of $4 per barrel.
Its founder and chairman Richard Selwa says the oil majorscan no longer be relied on for technological breakthroughs inmature basins where the potential prize is small.
"Marginal fields of between 2 and 20 million barrels is notan area where the super majors want to spend there money," Selwatold Reuters. "Ultimately the government can give the stimulus,the drive, the energy to make things happen... Your governmentreally can help you," he added.
UPB received government grants at an early stage, whichSelwa describes as absolutely critical to the firm'sdevelopment.
The company signed a memorandum of understanding with FTSE100 engineering firm Amec last year to install threeunmanned buoys in the North Sea. It expects to have its buoys inthe water by 2017.
Rival Enegi Oil is also using similar technology todevelop fields in the North Sea and hopes to have a FieldDevelopment Plan, an important step in the development process,completed for its Fyne field in the next six months.
Another small innovator is Plexus, developing asubsea wellhead - a tap controlling flow from an oil well -which works from the "outside in", using hydraulics to squeezethe wellhead onto the supports for the pipe going into theground.
Plexus says its system is safer, more reliable and cheaperover the long-term and will be suitable for increasingly commonHPHT wells.
ABERDEEN VS STAVANGER
With high oil prices making it worthwhile to invest insqueezing more oil out of old fields, technology has helped keepthe North Sea economical over the past decade. But while anestimated 12-24 billion barrels of oil could still be produced,new techniques are needed.
In recent years Norway's city of Stavanger has successfullycultivated an oil technology hub through a strong regulator, taxsubsidies and a national oil company - Statoil - whichinvests in and trials new kit and methods.
Britain, where the North Sea has been managed with more of alaissez-faire policy and without a national oil company, has hadless success in encouraging companies to invest in localresearch and development. Increasingly they have invested intechnology to be used elsewhere, such as in Brazil or WestAfrica.
"The amount of R&D and the introduction of new technologiescould have been greater. There hasn't been nearly as much R&D asthere was in the '80s," Alex Kemp, professor of petroleumeconomics at the University of Aberdeen Business School, toldReuters.
"So far we have very little genuine enhanced oil recoveryschemes, we only have some starting now," he added, referring toBP's decision to inject water to get more oil out of itsClair Ridge field.
The Wood Review stressed the importance of enhanced oilrecovery (EOR), where water, gas, or chemicals are injected intothe reservoir to force out more oil. The method can increase theamount of oil recovered from a reservoir to around 75 percent,from below 50 percent.
BP is using a form of EOR with low-saline water for itsClare Ridge project in the North Sea, the first large-scale useof the system in the area, and says it will enable an extra 40million barrels to be extracted.
The Wood Review suggested the regulator could block plans,or even take licences away, if operators did not demonstratethey were using effective technology to maximise oil recovery.
For Malcolm Webb, head of industry group Oil and Gas UK,this is one of the most important roles of Britain's newregulator - pushing companies, often hesitant about usingrelatively unproven systems, to use new technologies.
"I think that's where the new regulator can play a majorrole... Making sure people are aware of the technology andencouraged to use that technology in their offshoredevelopment."
BP (BP.)
