Economic Report 2018

ECONOMIC REPORT 2018

5.4 Prospectivity and Resource Base The UKCS has produced around 45 billion boe over the last 50 years. With an estimated 10-20 billion boe still to be recovered from the basin there is no shortage of oil and gas resources. 26 The prospectivity of the basin should not be seen as a constraint to meeting the ambition outlined within Vision 2035 of recovering at least 10 billion boe by 2035. However, with only 5.7 billion boe of proven and probable (2P) reserves at the end of 2016, it is vital that industry commits to new exploration and investment activity to increase recovery across the UKCS.

Figure 30: The UKCS Resource Opportunity 27

40

35

Upper

30

25

3C

Middle

Lower

20

2C

15

3P

1C

10

Reserves and Resources (billion boe)

2P

5

1P

0

Reserves

Contingent

Prospective

Source: OGA

The discovery of new volumes plays a crucial role in replenishing the pipeline of potential projects. Improving recovery from already producing assets provides a lower-risk, lower-cost route to replacing reserves which should be worked in parallel. Both will also provide vital production throughput for legacy infrastructure. UKCS Reserves Replacement – Where Are We Now? Reserves replacement has continued to decline – Between 2000-08, approximately 3 billion boe were discovered, with around 12 billion boe produced. However, between 2009-17, only around 1.2 billion boe were discovered while 6 billion boe were produced. Further intervention is required to extend the productive life of the basin – More than 16.5 billion boe have been produced since 2000 and, whilst production has declined significantly since, sufficient 2P reserves have been added to maintain the reserves-to-production ratio 28 at an average of around nine years. However, the lack of new projects being sanctioned in recent years has put significant pressure on the reserves base. It is vital that contingent resources are progressed, and new volumes discovered, to maintain the reserves-to-production ratio of the basin. 26 www.ogauthority.co.uk/media/4425/uk-reserves-and-resources-v1.pdf 27 1P, 2P and 3P reserves are those which have more than a 90 per cent (1P), 50 per cent (2P), and less than a 50 per cent (3P), chance of being recovered, respectively. Contingent resources are those which are potentially recoverable, but not yet mature enough for development. 1C, 2C and 3C relate to the lower, central and upper estimates, respectively. Prospective resources are those which are yet to be discovered, with a lower, central and upper range of estimate. 28 A measure of the remaining productive life of the basin (based on current 2P reserves and production). This can be extended through progression of resources and through new exploration.

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