NEW YORK The North Sea has long held Western Europe's richest trove of hydrocarbons, but now 50 years after the first major discovery in the region, production has been in decline.

In a prime example of the challenge that aging oil fields presents for energy giants, North Sea production is expected to drop by about 300,00 barrels a day in 2009 and 2010, a scenario that would put daily output below 4 million barrels.

Patrice de Vivies, senior vice president in charge of Northern Europe for Total SA, said the Paris-based oil major will manage to keep production about flat from the North Sea this year.

Looking forward, de Vivies acknowledges the challenges posed by declining wells, but the region and the Arctic environs to the north may offer a way to slow down and even possibly reverse the trend.

"There is, of course, a decline, but there is still potential," de Vivies said in a phone interview with MarketWatch. "That's the way we see it. It will decline a little bit, but we will manage to develop new fields to slow down the declines."

Total and most other players in Big Oil now find themselves in hot pursuit of drilling in areas in some of the coldest and most forbidding places on the planet.

With capital budgets reaching well into the tens of billions of dollars, Western oil giants continue to lay out plans for the waters in around the North Sea, a region that traces its roots to the 1959 discoveries in the on-shore Groningen gas field in The Netherlands.

The surprisingly vast resource at Groningen a generation ago led oil companies to experiment with offshore exploration nearby.

BP is widely credited with making the North Sea's first major discovery in 1965, with larger-scale production taking off by the 1970s.

The platforms built for the North Sea's shallow continental shelf of 1,000 feet of water were revolutionary at the time, but they're considered quaint by today's monster rigs able to drill in water a mile deep.

After the 1973 oil embargo, the importance of the North Sea grew as a way to reduce imported oil from the Middle East, with healthy payoffs for years.

But now with oil getting somewhat harder to find, exploration has turned further north.

While the United States shies away from developing some of its Arctic resources, Russia moved late last week to open up waters north of Siberia for exploration with major oil companies.

But there are no sure bets.

Total's Victoria natural-gas prospects in the Norwegian Sea were initially thought to contain as much as 90 billion cubic meters of the fuel, but they're now believed to be closer to 20 billion to 60 billion, Norwegian officials said last month.

De Vivies said the company plans to continue work on Victoria, which will require cutting-edge technology to cope with the unusually high temperatures and pressures in the area.

In another recent deal in the icy north, Total said it was awarded a 40 percent interest and operatorship at production license PL 535 in the Barents Sea, with E&P Norge, Aker Exploration, Rocksource and North Energy each holding 20 percent stakes in the exploration license.

In August, Total said it's likely to move forward toward fresh production at its Hild site, which dates to a discovery 30 years ago.

Total is the operator of Hild, with StatoilHydro holding a 21 percent stake and Norway's Petoro a 30 percent share.

Originally published by Steve Gelsi; MarketWatch.

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