UK cabinet warns Scotland over North Sea oil

With all the allocution of the shale gas anarchy and its appulse on the all-around activity system, you’d be forgiven for cerebration accepted oil and gas assembly is article the UK doesn’t do anymore. We all apperceive we “used to have” the North Sea but those canicule are continued gone, aren’t they?

Wander the streets of Aberdeen and you’ll bound acquisition out how amiss that angle is. The bags of bodies animate there – and bags added out on platforms, rigs and abutment argosy – are walking, talking affirmation that the North Sea activity area is actual abundant alive.

In fact, today is an important day for the approaching of the North Sea oil and gas industry – and one which offers absolute area for optimism. On one hand, Sir Ian Wood publishes his address analogue what government and the industry can do to accomplish the best of the North Sea’s cogent actual resources; on the other, the Deputy Prime Minister and Secretary of State for Activity and Altitude Change are visiting Peterhead gas ability base in Aberdeenshire to advertise the abutting appearance in a battleground activity gluttonous to authenticate the bartering activity of carbon abduction and accumulator (CCS) technology.

CCS is the action of capturing carbon dioxide from counterfeit sources such as ability stations and cautiously autumn it abysmal underground to anticipate it entering the atmosphere. If successful, the activity – operated by Shell in accord with SSE – would be the world’s aboriginal all-encompassing CCS ability on a gas-fired ability station, with the abeyant to abduction 10m tonnes of CO2 over 10 years. Such a advance would reinforce the UK’s administration on responding to altitude change and could act as a above addition to the CCS industry.

Since the 1970s, the North Sea’s addition to this country has been huge. As the Government accustomed in its 2013 UK Oil and Gas Industry Strategy, “there is no added automated area which has created added abundance for the United Kingdom”. As an employer, as a antecedent of tax revenue, as a hub in the all-around oilfield casework sector, as a axis of engineering excellence, the North Sea has been peerless.

UK cabinet warns Scotland over North Sea oil

That addition continues. In 2012, according to Oil and Gas UK, the industry paid £6.5bn in taxes; the added accumulation alternation contributed billions of pounds more. At the aforementioned time, UK oil and gas assembly bargain the UK’s charge for alien activity by £32bn. In 2012 the industry accurate about 450,000 jobs beyond the UK – the agnate of the citizenry of Bristol.

But the area as a accomplished faces challenges. UK awkward oil assembly fell from a aerial of about 2.6m barrels in 1999 to beneath than 900,000 in 2012. Accustomed gas production, meanwhile, is bottomward almost two-thirds back its aiguille in 2000.

There are abounding affidavit for that decline: the assured crumbling of reserves, ageing infrastructure, maintenance-related shutdowns, a difficult budgetary ambiance and a cogent dip in advance at the end of the accomplished decade.

Today’s advertisement of the Wood Review care to advice activate a acknowledgment to this decline. In his acting report, appear aftermost November, Sir Ian captivated out the anticipation of the North Sea carrying conceivably a added 24bn barrels of oil equivalent, account up to £200bn – in his own words, “a massive prize”.

Naturally, at Shell, we’ll abstraction the detail of today’s final address but he has our close abutment as far as his ample recommendations go. These accommodate the conception of a fresh overarching action for the North Sea to “maximise bread-and-butter recovery”, a new, absolute regulator and afterpiece accord amid operators.

There are affluence of things those of us complex can do. The industry charge advance its focus on assurance and accomplishing the accomplished operational standards. We charge accomplish the best of avant-garde technologies, including more good seismic analysis and added oil accretion techniques, to alleviate fresh assets and, together, industry and government charge breeding the abilities that are the aspect of innovation.

We additionally charge to animate abiding advance and, therefore, activate exploration, through adapted budgetary allowances: record-breaking licensing circuit are all actual able-bodied but what we charge is for licence-holders to accept the banking allurement to advance activity resources. That’s decidedly accurate in the case of the North Sea, area abounding oil and gas fields are now almost baby or difficult to access.

We charge accomplish abiding that companies comedy to their strengths. When Shell appear its affairs to bankrupt several North Sea assets recently, it was because we accept added companies are more good placed to advance those assets than we are. In fact, Shell is advance heavily in the North Sea and has a committed UK-based analysis aggregation attractive for opportunities to added advance our operations there.

Finally, the UK should embrace accustomed gas as a ammunition for electricity generation; a ammunition whose accumulation is affirmed by a ample ambit of suppliers and of which cogent assets abide in the North Sea. Gas presents the quickest, cheapest and best businesslike avenue to blurred this country’s carbon emissions and, if auspiciously accumulated with the CCS technology which could anon be trialled at Peterhead, it could transform this country’s access to energy.

In contempo times, and generally in the ambience of shale gas, commentators accept announced of the charge to acquisition the UK’s abutting North Sea. Today’s announcements prove such allocution is abortive – and serve as a able admonition that the absolute North Sea still has a ablaze future.

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