The head of the British oil and gas trade association yesterday rushed to scotch an expert report by Professor Roy Thompson of Edinburgh University’s School of GeoSciences that the N. Sea will run dry in 10 years’ time.
Her open letter – which does not dispute the professor’s report – is published below.
By DEIRDRE MICHIE
It is high time we stopped talking down this industry and instead got right behind it.
Yes, the downturn has grabbed the headlines of late, prompting some to think the demise of our industry is nigh.
And the low oil price business climate is still causing big challenges for some companies in our sector.
But there is so much that we should be talking up about the UK oil and gas industry and the value it generates for the whole of the UK.
Last year, oil and gas provided 76 per cent of the UK’s primary energy – 60 per cent of that was met by domestic production. And that need is not going away.
Global oil and gas demand is forecast to rise by 25 per cent between now and 2035 which means that this industry will continue to have a crucial role in helping to satisfy the world’s energy needs.
We also have a part to play in helping the UK achieve its climate change targets. Natural gas is an affordable, lower-carbon fuel that can fill energy gaps.
Ours is an industry that is becoming more efficient and competitive and which has almost halved its unit operating costs in just two years.
We have a supply chain that spans the length and breadth of the country – servicing domestic activities and exporting almost £12 billion of goods and services to other basins around the world. And we support around 300,000 UK jobs.
Suggesting that UK oil and gas reserves may last only a decade is rather surprising – particularly when it’s estimated there are up to 20 billion barrels of oil and gas still to be recovered from the UK Continental Shelf.
And it’s also not the case. Between 2014 and 2016, production has gone up by 16 per cent. Improving performance of existing oil and gas assets, has been at the heart of that.
But as well as getting more from our existing fields, significant new capacity has been added following a wave of fresh capital invested between 2010 and 2014.
Nine new fields began production in 2016, with a further seven in the first half of this year. These 16 developments will contribute over 300,000 barrels of hydrocarbons per day.
A further 12 fields are due onstream by the end of next year, increasing the contribution from recent developments to around 600,000 barrels of oil and gas equivalent. Most will still be producing into the 2030s and 2040s.
By the end of 2018, over one-third of total production will come from assets that have started production since 2016. Some notably large developments will still be producing towards 2050.
Government, industry and the Oil and Gas Authority are committed to maximising economic recovery from the UK Continental Shelf and much is being done to deliver towards that goal.
Millions of pounds are being spent on helping boost exploration by increasing understanding of under-explored areas in the UKCS and reassessing the potential of existing ones. A more flexible licensing regime has also been introduced.
Last year alone £17bn worth of oil and gas was produced from the UKCS.
These are the facts. The focus on developing as much of our natural resource as possible is an opportunity that industry and government must work together to deliver.
Deirdre Michie is chief executive of Oil & Gas UK.
21 Sept 2017