Today Oil and Gas UK announced a 30-year high in investment in the North Sea. We answer five questions on the UK offshore oil and gas industry’s rebound.
How much was invested in the North Sea in 2012?
According to Oil and Gas UK, which comprises 320 companies licensed by the Government to explore for and produce oil and gas in UK, last year £11.4bn was invested.
This has resulted from projects ranging from less than £50m through to some of over a billion pounds..
What is the reason for this rise?
Oil and Gas UK say the rise is down to recent improvements in the tax regime, which is encouraging companies to invest in the North Sea by making it more commercially viable.
What has production been like over the last few years?
Malcolm Webb, Oil & Gas UK’s chief executive, explains: “Only 21 exploration wells per year on average were drilled over the last three years. As a result, in 2012 not enough barrels were discovered to replace all those produced.”
He adds: “However, again, there is real cause for encouragement as the survey results lead us to forecast 130 exploration wells over the next three years which, alongside the use of new and improved sub surface technology, should result in many more barrels being discovered.”
Production fell to 1.55 million boe per day in 2012, down by 14 per cent from 2011 and by 30 per cent from 2010.
And the future?
In 2013 investment is expected to rise to £13 bn.
However, production is expected to fall slightly this year too 1.45 – 1.5 million boe per day. Nevertheless, a significant upturn is expected over the next three to four years due to this surge in investment, rising to approximately two million boe per day by 2017.
It is expected that the projects approved in 2011 and 2012 alone will over time produce more than two billion barrels of oil and gas, generate £100 billion value for the economy and an additional £25 billion in production taxes for the Exchequer.
Mr Webb added: “There has always been an over-riding case to maximise recovery of the UK’s oil and gas resources. It has never been more important or relevant that we do so than now. Seventy per cent of British energy requirements will likely still need to be met by oil and gas into the 2040s. As a nation we need to satisfy as much of that demand as possible from our own resources. “
How many reserves are expected to be left in the North Sea?
The BBC report that the Scottish government has said there is still 24 billion barrels of oil still to be recovered in the North Sea with a wholesale value of £1.5 trillion.