Of the half-dozen Australian upstream companies that have had North Sea work programs, the best-known is Roc Oil.

In 1999, Roc picked up a UK portfolio that has since been restructured. The company currently has stakes in two oil fields – 12% in Enoch and 12.5% in Blane – and has sold off its onshore Saltfleetby gas field.

Enoch was brought into production at the start of June at a capital cost of about ₤100 million ($A235 million) with an early recovery rate of 12,500 barrels of oil per day and 20 million cubic feet of gas per day.

The news from earlier this year at the Blane development was not so positive. Bad weather and delays in constructing the platform caused a 20% cost increase to ₤250 million of which Roc was liable for ₤31.5 million.

At last report, Blane is to be in production by the end of the third quarter. At that point Roc, which also has producing assets offshore Mauritania, in the Perth Basin and in China, will be generating between 3000 and 3500bpd from its two North Sea assets, or just over 30% of the company’s total production.

But Roc is planning on leaving the North Sea, despite its success in this region.

Roc head of UK investor relations Kevin Hird said the company did not see a strong future for itself in UK waters.

“The North Sea is too competitive, too expensive [to buy assets] and therefore the margins are too slim,” Hird said.

“We never deliberately targeted the North Sea and our strategy since establishing initial cash flow has been to divest and diversify away from the North Sea. We stayed because we were in production, but it’s actually not a focus for Roc at all.”

He said the region was very mature, as most production had been online for a long time, most fields were in decline and what was left to discover was going to be small.

“Our objective is to grow significantly and to do that you need to have significant exploration success and I think the North Sea is very mature from an exploration point of view,” he said.

Another Australian company, Perth-based junior Nido Petroleum, has already left the North Sea, choosing to focus on its Philippine assets.

But some smaller players – Elixir Petroleum, Sunshine Gas and Norwest Energy – say while Roc has grown too big for this shrinking pond, the North Sea still has a lot to offer juniors.

Elixir decided to list as a North Sea explorer in 2004.

“We got involved in the North Sea because no one here [Australia] had really thought of it,” managing director Russell Langusch said.

“Australian companies are going to the US and all over the world but not to the UK, so we’re one of the first that decided to target the North Sea.”

He admitted the region had high costs and was very competitive, but said it also had advantages.

The region’s maturity meant many majors had moved on, leaving behind acreage that could still hold medium-to-large size fields, possibly between 50 million and 100 million barrels (MMbbl), which would still be material for companies such as Elixir.

While about two thirds of the oil and gas has been found and produced, about one third was still to be found, according to Langusch. Last year, 500MMbbl of oil equivalent were found in the North Sea and as recently as 2001, the 600MMbbl Buzzard field was discovered.

“The majors have left for areas where they can find elephants but what’s left over here is still sizeable,” he said.

The region also offers good infrastructure, and favourable legal and tax systems, he said. Elixir was aiming to take advantage of the “promote” licence introduced in 2003, which was virtually a short-dated option. The promote licences are issued cheaply so that prospects can be worked up to the point where they are ready to be drilled and a partners can be sought to share the cost.

While Elixir is also acquiring Gulf of Mexico assets via a merger with Gawler Resources, it sees the GoM acreage as low risk, modest reward and the North Sea block as having the exploration upside potential.

To date, Elixir has put in four wells over its eight North Sea licences without a substantial find, but Langusch said he wasn’t bothered and the company was also looking for other North Sea prospects in Norwegian and Dutch waters, which were less mature.

“It’s matter of persistence,” he said. “We’re yet to be successful, but in the oil and gas game you very rarely drill your discovery on the first or second hole.”

Sunshine Gas and Norwest Energy have also maintained their belief in the region, adding more offshore oil prospects to their respective North Sea portfolios from the 24th UK Seaward Licensing Round in February.

Sunshine joined its UK partner Hurricane Exploration in picking up another five frontier offshore blocks west of Shetlands. As operator, Hurricane has committed to shoot 2D seismic as well as reprocessing 3D over the area.

But following disappointment in last year’s West of Shetland drilling campaign, the junior has recently been emphasising its Queensland coal seam methane and conventional gas programs to much better effect.

Norwest and partner London-based Encore Oil were awarded a licence in the Southern Gas Basin next door to their existing 50:50-held permit. The two blocks are on trend and updip from the Amethyst gas field, which has 735 billion cubic feet in reserves and has been producing for more than 15 years.

But Norwest and Encore recently diluted their stakes to 25%, with two major Indian energy players, Bharat Petroleum and Tata Petrodyne, agreeing to pay 40% of the costs for an appraisal well to earn a 25% interest each.

Companies now entering the North Sea are faced with an increasingly technical proposition as the industry moves to unlock the next stage in development of this highly explored and well-developed province, according to peak industry body Oil & Gas UK.

Operations director Paul Dymond emphasised the importance of the sub-sea oil and gas sector as a high-tech, high investment industry “of tremendous importance to the UK” during a series of seminars recently hosted by the group.

“About 40% of production on the UK continental shelf is now extracted using sub-sea technology and it forms the linchpin of export activity in the sector,” he said.