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Challenge to unlock North Sea oil reserves

telegraph.co.uk

Challenge to unlock North Sea oil reserves

By Russell Hotten, Industry Editor

Last Updated: 12:04am BST 09/07/2008

 

 

UK oil and gas production will fall 5pc over the next five years despite fields in the North Sea and along other parts of the coast containing 25bn barrels of recoverable crude, says the industry group Oil and Gas UK (OGUK) in its latest economic report.

Reserves could be unlocked if the Government worked closely with industry to clear the way for more investment, Malcolm Webb, OGUK chief executive, said yesterday at the launch of the report.

A high oil price can make exploration more economical but some major players in the industry, including Royal Dutch Shell, are withdrawing from the North Sea because all the easy-to-find crude has been extracted.

In the North Sea over the next five years, energy companies have £21bn of investment plans in place, targeting around 2.7bn barrels. The industry is looking to extract another 10bn barrels from the North Sea in the long term but that is still less than half what is available, Mr Webb said.

“The UK’s oil and gas basin contains up to 25bn barrels of oil and gas that we could ultimately recover,” he said.

“Plans currently in place should reach about 10bn of those barrels so the challenge in the hands of the Government and industry is how to achieve the remaining 15bn. Whilst realising this goal will require massive further investment from the industry, at $100 per barrel, it is worth $1.5 trillion to the British economy and this is a prize which the country should not contemplate losing.

“Barrels left in the ground do not pay taxes, do not sustain jobs, do not help secure the nation’s energy supply and provide no support to the country’s balance of payments.

“We look forward to continuing discussions with the Treasury on ways to increase the competitiveness of the UK oil and gas basin. “

The UK’s oil and gas extraction will drop to between 2.6m and 2.7m barrels a day of oil equivalent this year, down from an average of 2.8m in 2007, according to OGUK.

http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/07/09/cnoguk109.xml

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