Economic Report 2016 - Oil & Gas UK

ECONOMIC REPORT 2016

Figure 23: New Field Approvals

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12

10

8

6

4

Total Capital Investment by Field (£ Billion - 2015 Money)

2

0

2010

2011

2012

2013

2014

2015 2016 to date

Year of Field Approval

Source: OGA, Oil & Gas UK

The lack of discretionary capital investment being committed to the UK is perhaps the biggest threat to the long-term future of the basin, as it has the potential to accelerate abandonment of infrastructure and diminish the scale of the UK’s supply chain. If no new investments are secured over the next few years, investment will fall to as low as £2 billion per year by 2020. Furthermore, the lack of material exploration success and decline in E&A activity over the last seven to eight years (see section 5.2) means that the pool of new development opportunities in the UK has also fallen. There are now just 26 pre-sanction greenfield opportunities in company plans and only four of these potential projects contain more than 100 million boe. For the long-term future of the basin, it is important that exploration activity improves and new investment rapidly begins to recover. In the current climate, it is more likely that smaller near-field and brownfield opportunities with faster payback will provide short-term stimulus to investment. However, a continuum of new large field developments is also needed to stabilise the future of the industry.

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