I AM absolutely convinced that the UK oil&gas market remains a key and exciting place to invest.
My visits to offshore fields such as Elgin/Franklin in the North Sea have left me overwhelmed by the sheer scale of such projects and the innovative thinking involved. I continue to be extremely impressed by the world-leading technology being deployed at those sites.
Industry expenditure on the UKCS has reached record highs of £11billion a year, supporting more than 400,000 jobs, and we believe there are still substantial quantities of oil to be extracted from the North Sea – potentially 25billion barrels more.
Just last month, a report from consultancy firm Hannon Westwood outlined 180 new wells planned by the end of the decade, requiring outlay of more than £500million a year.
In 2006, half-a-billion barrels of oil were discovered – the largest quantity since 2001 – with, encouragingly, about 40% of exploration wells uncovering potentially commercial oil and gas accumulations.
However, we must not be complacent. We need to continue to pursue initiatives to generate more exploration and appraisal drilling, as well as enhancing recovery from existing “brown” fields across the North Sea.
Our PILOT programme, launched in January, 2000, has been extremely successful and we are currently pursuing a range of initiatives to stimulate investment – from enhancing licensing systems to unlocking potential new sites. Our research suggests that more than 15% of remaining reserves are located West of Shetland and we will continue to work with the industry to unlock these.
We also must not overlook the skills and knowledge of our first-class workforce, and I officially launched OPITO – the Oil & Gas Academy at the end of last year.
While we have to accept that production from the UKCS has peaked and that we are no longer self-sufficient in hydrocarbons, the steps taken through PILOT over the past years have ensured that we will continue to be a major hydrocarbon producing country for many years to come. By 2020, we will still be securing about 50% of the nation’s oil and gas from our indigenous reserves.
But we recognise the environmental impact of fossil-fuel consumption and are undertaking steps to mitigate the environmental effects with the development of carbon capture and storage (CCS). By getting ahead of the game we could become a market leader in CCS and take a share of a multibillion-pound market.
This week, I am attending the Offshore Technology Conference in Houston to hear for myself how world-class skills and knowledge can be utilised to bring on carbon storage technologies and enhanced oil recovery.
It will also provide me with the opportunity to promote the ongoing work and progress of the UK’s oil&gas industry and ensure Britain retains its position.
Malcolm Wicks is UK Minister of State for Energy, Department of Business, Enterprise and Regulatory Reform (BERR)
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