Economic Report 2020

ECONOMIC REPORT 2020

Maintaining investment in the UK’s oil and gas industry

faster rate than demand – increasing the UK’s reliance on net-energy imports. More than 46 billion boe have been produced from the UKCS and the OGA estimates there are still 10-20 billion boe remaining to be recovered. These resources will continue to play an important role in the UK’s future energy mix and a competitive and attractive investment framework is therefore needed to be in place to attract the capital required to unlock these resources. An important aspect of this will be the clear recognition of the important role of oil and gas from government in the upcoming Energy White Paper, as well as the revision of the OGA MER Strategy document and the Offshore Licensing reviews. More than £150 billion of capital (in real terms) has been invested in the basin over the last 20 years, with roughly two-thirds of this (around £100 billion) committed between 2010–19. This has been crucial in the effective management of production, with a direct relationship between rates of investment and output. Between 2000–09 (during which time investment

In 2019, updated figures show that the UK met 61 per cent of the demand for oil and gas from indigenous resources (almost 50 per cent gas and 73 per cent for oil products) and the basin has the potential to continue to support energy security in the decades to come. As outlined in current projections by the Climate Change Committee 37 and National Grid Future Energy Scenarios, 38 oil and gas demand will reduce on the path to net zero; however will still amount to levels far in excess of domestic production in 2050. In a world where sustainability is a priority, it has to be the case that the UK makes the most of its own resources rather than meet demand by imports, offshoring emissions and consuming other countries’ resources instead. Investing in finding and developing new resources on the UKCS allows the UK to maximise our indigenous resources and minimise net imports, provided we do so in a manner which allows for continued cuts to our own emissions. Continued investment in the progression of opportunities is crucial inmanaging thebasin’s productionprofile. Failure to do so will result in domestic production declining at a

2P reserves 5.2 bn

contingent 7.4 bn

mean prospective 4.1 bn

Resources

10-20bn boe left in the UKCS

Source: OGA

37 https://www.theccc.org.uk/publication/net-zero-the-uks-contribution-to-stopping-global-warming/ 38 https://www.nationalgrideso.com/document/173821/download

26