Global energy firms will invest more than £300bn to explore UK waters over the next 30 years as the revival of oil and gas exploration in the North Sea gathers pace, a study has found.
The new study - by economists at Aberdeen University – found that a further 17 billion barrels oil and gas could be recovered from the UK’s offshore fields by 2050, with firms likely to invest up to £330bn in the effort.
Professors at the Scottish university conducted the study to determine whether the Oil and Gas Authority’s hopes that a further 14.9bn barrels could be recovered from the UKCS by 2025 were realistic. They found the targets set in the regulator’s Vision 2035 plan were achievable.
They found that firms would spend £158bn developing fields, at 2018 prices, and £172bn running them.
The North Sea, which is one of the priciest places in the world from which to extract oil, was impacted by the oil price crash in 2014 and led to many explorers shifting their focus elsewhere and seeking to drill only the most competitive and profitable wells. Stability has returned to the industry in recent months with oil trading at around US$80 a barrel.
However, as prices have rebounded, so has the attractiveness of exploring for oil and gas in UK waters.
Energy giants circling
The Aberdeen University report comes hot on the heels of the news that - earlier this week - BP (LON:BP.) and Royal Dutch Shell (LON:RDSA) received approval for a new North Sea development which they hope will yield 20mln barrels of oil.
The two energy giants received approval from the Oil and Gas Authority for their joint venture to drill at the Alligin field - part of the Greater Schiehallion area - off the west of Shetland. It is expected to come on stream in 2020 and should produce 12,000 barrels of oil per day at its peak, according to the two companies.
Oil and Gas UK said nine new North Sea developments had been approved in 2018 - the same number as in the previous three years.
This is BP’s second approval for the North Sea drilling in quick succession after it was last month given the green light for its Vorlich field, which it hopes will yield up to 30mln barrels of oil.
This comes on the back of recent news that Hurricane Energy (LON:HUR) will start production from the Lancaster field in the first half of next year and Enquest’s (LON:ENQ) move to take full control of the Magnus field.
Zennor Petroleum has also received field development approval for its plans in the Finlaggan field in the central North Sea.