A new industry report from Oil & Gas UK has indicated that approximately £1 trillion is needed to fully recover the gas and oil remaining within British waters.
According to the industry body, as much as 20 billion barrels of oil equivalent (boe) are thought to remain offshore in the UK Continental Shelf (UKCS) with £1 trillion needed to offset the operational costs and financial incentives required to successfully extract it.
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Malcolm Webb – Oil & Gas UK’s Chief Executive – claimed that maximising oil and gas recovery from this particular area was “the collective responsibility of all those who fund, regulate, tax and operate the offshore oil and gas industry” – thus calling on government and industry figures alike to get involved.
“Our industry makes far too important a contribution to the economic and energy security of the nation to be allowed to falter at this critical point,”.
“Full implementation of Sir Ian Wood’s recommendations for regulatory reform, and far-sighted changes to the fiscal regime, are needed in the next 12 to 18 months to stimulate new investment in exploration and production."
Oil & Gas UK’s Economics Director, Michael Tholen added, “We need a lighter tax burden, a simpler and more predictable system of field allowances and fiscal support for exploration. The outcome of the Fiscal Review, expected to be announced in December this year, must be relevant, radical and robust.”
Supporting offshore projects
By calling on government and industry officials to support the industry through considerable investment, the report also highlights the plethora of opportunities currently available.
According to Oil & Gas UK there are at least 150 projects seeking investment in offshore British waters and it is vital that these projects are given the support they need to achieve the final sanction and begin maximising the extraction of remaining reserves.
Recent data from the Department of Energy & Climate Change has shown that North Sea outputs are already up 1% over the first six months of this year thanks to a £28 billion investment in production made at the beginning of 2013.
By calling for further oil and gas investment, Oil & Gas UK are therefore hoping to replicate this success on a much grander scale.
This will not only benefit the industry but also help to support the wider UK economy as it continues to recover from the 2008 recession.
Counting on experience
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Photo Credit: Ed Schipul