The UK Government and the oil and gas industry need to work together to help ensure not only increased, but more productive investment in the UK offshore if the full potential of its remaining oil and gas reserves is to be realized, according to Oil & Gas UK.
The industry body’s 2008 economic report highlights buoyant exploration and production activity on the UK continental shelf (UKCS) and strong exports of UK oilfield goods and services.
Oil & Gas UK notes, however, that while the industry spent £12.4 billion in 2007 on exploration, development and production including significant investment in asset integrity to extend infrastructure life, this disguises a worrying drop in the money spent bringing new reserves into production. That figure fell from £5.5 billion to £4.9 billion in 2007.
Furthermore, significant cost inflation means that this capital is only a third as efficient as five years ago, resulting in fewer new reserves being brought into production. The report suggests that oil and gas companies plan to invest around £21 billion over the next five years, targeting around 2.7 billion boe of potential developments in addition to the 7.1 billion boe which are currently onstream.
Malcolm Webb, Oil & Gas UK’s chief executive, said: “The UK’s oil and gas basin contains up to 25 billion barrels of oil and gas that we could ultimately recover. Plans currently in place should reach about 10 billion of those barrels so the challenge in the hands of the Government and industry is how to achieve the remaining 15 billion barrels. Whilst realising this goal will require massive further investment from the industry, at $100 per barrel, it is worth $1.5 trillion to the British economy and this is a prize which the country should not contemplate losing.”