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Daily Telegraph: Majors wary of ‘bumper’ N Sea claim

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(All at sea: the big oil companies fear that the Government’s assessments of oil and gas reserves are too optimistic)

By Roland Gribben
Last Updated: 11:34pm GMT 11/02/2007

Optimistic Government assessments about North Sea oil and gas prospects will be tempered by industry reservations in a survey due out today.  

Oil companies are concerned the Government is in danger of prematurely “talking up” the outlook for a recovery in offshore production after the award of a record number of new exploration and production licences and what Alistair Darling, Trade and Industry Secretary, regards as a “bumper year for discoveries.”

The survey, from the UK Offshore Operators’ Association, the industry body, is expected to be more cautious than the Government about future discovery rates and point to the damage to exploration and asset sales caused by the tax regime while underlining the continuing high levels of offshore investment.

Last year was the best for new oil and gas finds for five years with at least 500m barrels added to reserves, while this year has seen the start of production in the Buzzard field, the biggest discovery in a decade.

The level of successful drilling last year was also encouraging with around 40pc of exploration wells making potentially commercial oil and gas discoveries. Total exploration drilling, however, fell sharply from 41 to 29 wells.
Government efforts to attract small companies to move into the North Sea to try to fill part of the gap left by the rundown in operations by ”big oil” in the shape of BP and Shell have resulted in record allocations of new licences over the past two years.

Earlier this month Mr Darling awarded 150 exploration and production licences to 104 companies after handing out 151 to 98 last year. The programme has been helped by incentives that allow small companies to pick up some licences at a tenth of the cost of the normal price for two years.

The faster-than-expected rundown in North Sea production, particularly gas, has seen the Government increase its efforts to persuade oil companies to move faster to develop the remaining 20bn barrels estimated to be still lying in oil and gas deposits.

Mr Darling feels that higher oil prices have helped the North Sea recover some of its investment attractions. Companies argue the mature North Sea province holds less interest than other prospects.

Total North Sea output is he equivalent of 3m barrels a day of oil and gas, against a peak of 4.5m in 1999 and its sister websites,,,,, and are all owned by John Donovan. There is also a Wikipedia article.

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