UK energy industry consultant Hannon Westwood said yesterday that the oil and gas service sector could take a leading role to access the benefit of the estimated 23billion barrels of oil equivalent remaining in the UK North Sea.
Hannon Westwood suggested that the industry was only “structurally optimised” to exploit known resources rather than to explore for new reserves, and as a result new business models needed to be found to ensure continued exploration and production (E&P) activities in the region.
The firm said that as the major oil companies continued to focus on higher impact niche plays such as high-pressure/high-temperature and west of Shetland, the independent and small-cap operators were the companies left holding the baton.
It added, however, that with little likelihood of further fiscal incentives to encourage UK continental shelf activity (UKCS) and the smaller independents struggling with access to capital, technologies and services, it believed companies in the service sector which had resources, could take a lead through increased exploration and development risk/reward exposure.
Jonathan Bedford, of Hannon Westwood, said: “The £120billion of investment estimated by Hannon Westwood to be required to deliver this potential over the next 30 years represents a significant prize for the oilfield service industry.
“It is a figure that dwarfs the £16.4billion needed for production of currently producing reserves.
“Over the past 30 years, the North Sea oil and gas industry has seen the development of an advanced service industry that increasingly exports its technology and operations overseas. Prolonged activity on the UKCS will ensure that the sector’s success continues.”
