A major step up in exploration and development rates needs to happen or billions of barrels of UK oil and gas could go unexploited, an industry event heard yesterday.
Oil and Gas UK’s activity survey 2012 launch heard that at current rates of exploration – at about 300million barrels of oil equivalent a year – it would take 46 years to discover the remainder of the 24billion barrels the Department of Energy estimates could still be recovered.
Some 11.9billion of recoverable reserves are yet to be extracted, according to the activity survey.
At current rates of new fields coming on stream it would take more than 450 years to develop what is thought to be left in the North Sea.
The comments were made by James Edens, managing director of CNR International, who was highlighting a 50% drop in exploration drilling on the UK North Sea last year, revealed in the 2012 activity survey, launched in the Aberdeen Exhibition and Conference Centre at a capacity breakfast briefing.
He said: “At the current rate of bringing new developments on stream – 30million barrels in 2011 – it would take 466 years to extract what is left, but half of the infrastructure will be gone in 10 years.
“It is really making the point that unless something is done to find those volumes, we they will never be discovered or developed. It is a call to action that, if nothing out there incentivises firms to explore and bring on new developments, the potential reserves of this basin out there are never going to be realised.”
He said the UK Government had been asked to help the industry in the coming Budget by providing brownfield and west-of-Shetland allowances and extensions to small and high-pressure, high-temperature fields – at no extra cost to the Exchequer.
The event also heard from Mike Tholen, director at industry body Oil and Gas UK, who questioned how the North Sea would cope with an oil price below the record $111 (£70) levels seen in 2011.
Despite the high price and record spending announced, he said 2011 had been a difficult year, with an 18% drop in production, few new fields coming on stream, the slump in exploration drilling, higher taxes and increased costs.
A key theme of the breakfast event, which had a record turnout of 540 people, was next month’s Budget and the need for it to contain concessions for the industry.
Oil and Gas UK chief executive Malcolm Webb said dialogue with government had been positive, but that the collaboration with the Treasury would need to continue after the budget.
Derek Henderson, senior partner at Deloitte in Aberdeen, also highlighted concerns over access to finance and how difficult capital markets were holding back smaller exploration and production firms.
