Investment in the UK sector of the North Sea in 2013 will be the highest seen for more than 30 years, an industry body claimed today.
In its 2013 Activity Survey, published today, Oil & Gas UK said that the growth in capital spending is good news for the economy because it means more jobs, more oil and gas, additional tax revenues and a boost to the balance of trade.
There was a diverse mix of investments made last year, ranging from smaller projects of less than GBP50m through to some in excess of GBP1bn. Over the course of this year the total amount invested is expected to rise to at least GBP13bn, from GBP11.4bn in 2012.
Continuing the downward trend of the last few years, production may fall again slightly this year, to around 1.45 to 1.5 million boe per day, but the increasing investment is predicted to result in a significant upturn over the next three to four years, rising to approximately two million boe per day by 2017.
One of the reasons for the increase in investments is recent changes to the tax regime, meaning that more oil and gas reserves have become commercially viable for development.
Oil & Gas UK noted, however, that as reserves have moved into production they have not been fully replaced by new discoveries. This means that the industry faces a challenge to increase the number of exploration wells being drilled. Over the last three years only 21 exploration wells per year on average were drilled and in 2012 not enough barrels were discovered to replace all those produced. On a positive note, though, the organisation said that it expects 130 exploration wells to be drilled over the next three years. This, alongside the use of new and improved sub-surface technology, should result in many more barrels being discovered.
Overall, Oil & Gas UK reported that investments totalling almost GBP100bn are now in companies’ plans, highlighting the potential for the UK’s offshore oil and gas sector to boost economic activity and contribute to the country’s prosperity for many years to come.