Monday, 24 February 2014

Most of their reservoir is depleted now

So who said this and about what? Well it was  Abdalla Salem El-Badri the Head of OPEC discussing the UK's oil reserves in October of last year.

On a quick facts basis here are some rather key ones too:

- UK production is expected to drop to 800,000 barrels a day this year, down from a production peak of 2.92 million in 1999. That is, umm, a 75% drop in production in just 15 years.

- With huge investment needed into getting North Sea production back on-line, it is unlikely this will go over one million barrels per day ever again.

- The decline is North Sea production is the fastest of any large system in the World over the past decade.

- The UK became a net importer of oil again in 2007.

- Newer North Sea companies, such as Xcite Energy (tipped here many a moon ago, but struggling still) are really struggling to find finance. This is because their cost of to pump the oil is at $80 barrels plus and the oil is much heavier than Brent - so less valuable. Taking this into account is huge as it means the margin available to tax is far slimmer. Even if these companies are successful and we have more successful drilling in the likes of the Bressay field and others, the tax revenues potential is far less than was the case with the Forties field.

So basically, Salmond and Cameron can discuss all they like in Aberdeen about UK offshore oil reserves, but this is yesterday's story in many ways. The future will be Fracked gas onshore in the UK - sadly for Scotland much of this is in England.

13 comments:

Anonymous said...

It might be declining but it's still a substantial industry, especially when viewed against Scottish GDP.

No wonder there's a fight over it, especially if Salmond can use it as a stick to beat others with.

Nick Drew said...

I see Ed Davey, not content with taking over total control of the electricity generating sector, is making yet another grab for full dirigiste powers**, this time the North Sea

"We will create a new independent body to take charge of stewardship of the UK continental shelf"

all under the usual banner of security of supply - the last refuge of a scoundrel (theenk of the grand-cheeldren)

are there no doctrinaire free-traders in this government ?

____________
(** plus the obligatory dig at Salmond: "Because of the size and diversity of the UK economy, we can provide the stability, certainty and levels of support that a smaller country would struggle match")

hovis said...

"The future will be Fracked gas onshore in the UK"

With a production drop off of 90% on each fracked well within 1 - 2 years good luck with that.

Graeme said...

hovis - any source for that assertion? It certainlky does appear to correlate with experience in the US - when not filtered through the minds of activists such as Dr David Smythe (who appears to know nothing about fracking or about map-reading).

For a different view try:
http://www.frackland.blogspot.co.uk/p/shale-gas-faq.html

you can also find there a comprehensive demolition job on Smythe's paper on Balcombe

Graeme said...

meme ot myself...review comments before posting...it should read

"does not appear to correlate with experience in the US"

CityUnslicker said...

Graeme - there are no sins of grammar on this site. not with me in control seat...

CityUnslicker said...

Hovis - using the past 15 years as a guide, there is unlikely to be any production from the North Sea within 10 years - depends how you want to read the graphs as always.

Ryan said...

Hmmm, yes, from what you are saying there won't be any oil out of Scotland within 10 years as you say. So what are we arguing about? Scotland is finished if it goes the independence route....

By the way, even if Scotland had a lot of oil it would have a big problem, same problem as Norway. Norway has a lot of oil - so it has almost no other exporting industry. Fact is, when you have one industry which is totally dominant then it defines the nature of the currency - from exchange rates to the cost of pints of beer in the pub because everybody wants a slice of that oil cake. Before you know it you have choked off the rest of your exports from farm produce to bank services. Ooops.

hovis said...

CU - indeed, and there are always so many other considerations. I didnt intend to hijack the thread merely to tweak the odd tail and point out something that isnt often said re Shale.

Graeme: yes the source is the US experience. I can get you references if you need, though I suspect from your tone you have this info.

dex said...

Your tips for Xcite might be bearing fruit finally. i saw they just signed a MOU with AMEC to build their platform on the Bentley field. Not quite as good as pouring cement and welding steel but a step closer from the sounds of it.

Considering their dip in share price, might be worth it now.

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