Offshore staff
LONDON – Oil & Gas UK says constructive engagement with the UK government has encouraged investment in Britain’s offshore oil and gas resources.
According to the association’s 2012 Economic Report, total capital investment on developing the UK’s reserves last year rose by 40% to £8.5 billion ($13.1 billion), again making the sector the UK’s largest industrial investor. Total expenditure on UKCS exploration, developments, and operations was nearly £17 billion ($26.3 billion).
In March, theChancellor’s annual budget announced new measures to promote greater activity in a targeted way, and discussions continue on ways to further stimulate investment. In parallel, various large new projects are under way, lifting the industry’s development investment commitment this year to around £11.5 billion ($17.8 billion).
Oil & Gas UK CEO Malcolm Webb said: “Following a period of sustained fiscal uncertainty, the industry is now more confident that the government recognizes the maturity and costliness of the province relative to other investment destinations and the unshakeable link between fiscal predictability and investment, production, jobs, and tax revenues.”
Altogether, UK oil and gas fields delivered 656 MMboe in production last year, an average nearing 1.8 MMboe/d. However, there was an unexpected 19% drop in production due to lower gas demand, and unplanned stoppages for asset integrity-related work. Plus, only a small number of new fields came onstream owing to markedly lower investment during 2007-09.
Production costs also were higher than in previous years, with the operating cost per barrel on the UKCS rising by a quarter from 2010 to $17/boe.
Exploration wells drilled last year were half the level completed in 2010, although there was a high success rate, delivering between 200 and 300 MMboe.
Webb said: “While tax allowances have been given to stimulate investment in small, deep, and technically challenging fields, attracting investment for the significant volume of brownfield and other reserves that lie ‘fiscally stranded’ is still a challenge.
“Oil & Gas UK is keen to continue to work closely and openly with government in pursuit of our shared and common purpose of maximizing the recovery of Britain’s offshore oil and gas resources.”
7/9/2012
