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Five questions answered on the 30-year investment high for Oil and Gas UK

Industry rebound.

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.

Heidi Vella is a features writer for

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The strange death of boozy Britain: why are young people drinking less?

Ditching alcohol for work.

Whenever horrific tales of the drunken escapades of the youth are reported, one photo reliably gets wheeled out: "bench girl", a young woman lying passed out on a public bench above bottles of booze in Bristol. The image is in urgent need of updating: it is now a decade old. Britain has spent that time moving away from booze.

Individual alcohol consumption in Britain has declined sharply. In 2013, the average person over 15 consumed 9.4 litres of alcohol, 19 per cent less than 2004. As with drugs, the decline in use among the young is particularly notable: the proportion of young adults who are teetotal increased by 40 per cent between 2005 and 2013. But decreased drinking is not only apparent among the young fogeys: 80 per cent of adults are making some effort to drink less, according to a new study by consumer trends agency Future Foundation. No wonder that half of all nightclubs have closed in the last decade. Pubs are also closing down: there are 13 per cent fewer pubs in the UK than in 2002. 

People are too busy vying to get ahead at work to indulge in drinking. A combination of the recession, globalisation and technology has combined to make the work of work more competitive than ever: bad news for alcohol companies. “The cost-benefit analysis for people of going out and getting hammered starts to go out of favour,” says Will Seymour of Future Foundation.

Vincent Dignan is the founder of Magnific, a company that helps tech start-ups. He identifies ditching regular boozing as a turning point in his career. “I noticed a trend of other entrepreneurs drinking three, four or five times a week at different events, while their companies went nowhere,” he says. “I realised I couldn't be just another British guy getting pissed and being mildly hungover while trying to scale a website to a million visitors a month. I feel I have a very slight edge on everyone else. While they're sleeping in, I'm working.” Dignan now only drinks occasionally; he went three months without having a drop of alcohol earlier in the year.

But the decline in booze consumption isn’t only about people becoming more work-driven. There have never been more alternate ways to be entertained than resorting to the bottle. The rise of digital TV, BBC iPlayer and Netflix means most people means that most people have almost limitless about what to watch.

Some social lives have also partly migrated online. In many ways this is an unfortunate development, but one upshot has been to reduce alcohol intake. “You don’t need to drink to hang out online,” says Dr James Nicholls, the author of The Politics of Alcohol who now works for Alcohol Concern. 

The sheer cost of boozing also puts people off. Although minimum pricing on booze has not been introduced, a series of taxes have made alcohol more expensive, while a ban on below-cost selling was introduced last year. Across the 28 countries of the EU, only Ireland has higher alcohol and tobacco prices than the UK today; in 1998 prices in the UK were only the fourth most expensive in the EU.

Immigration has also contributed to weaning Britain off booze. The decrease in alcohol consumption “is linked partly to demographic trends: the fall is largest in areas with greater ethnic diversity,” Nicholls says. A third of adults in London, where 37 per cent of the population is foreign born, do not drink alcohol at all, easily the highest of any region in Britain.

The alcohol industry is nothing if not resilient. “By lobbying for lower duty rates, ramping up their marketing and developing new products the big producers are doing their best to make sure the last ten years turn out to be a blip rather than a long term change in culture,” Nicholls says.

But whatever alcohol companies do to fight back against the declining popularity of booze, deep changes in British culture have made booze less attractive. Forget the horrific tales of drunken escapades from Magaluf to the Bullingdon Club. The real story is of the strange death of boozy Britain. 

Tim Wigmore is a contributing writer to the New Statesman and the author of Second XI: Cricket In Its Outposts.