Out of memory error message

Hi there, I'm new to the forum, I'm wondering if anyone can advise me

I currently trying to compress a 44 min doco format HDV 1080i50 and keep getting an out of memory message. sequence settings are set to render all YUV material in high precision, and I also have a denoiser added to some elements, both of these I want to retain to get the look I need. I have split the programme down to 3 fifteen minute ish sequences and tried brining the sequence settings down, but still no joy.

I'm working in FCP 7 with 12GB Ram, on 21.5 inch and with ATI Radeon HD 4670 Graphics Card

Have over 230 GB on the boot machine and the external HDD with has over 100 GB free

What am I doing wrong or do I simply not have the processing power?

To clarify, is the error appearing in Final Cut Pro or Compressor?

My software:
Pro Maintenance Tools - Tools to keep Final Cut Studio, Final Cut Pro X, Avid Media Composer and Adobe Premiere Pro running smoothly and fix problems when they arise
Pro Media Tools - Edit QuickTime chapters and metadata, detect gamma shifts, edit markers, watch renders and more
More tools...