Industry Perspectives

Stewardship of the UK´s Oil and Gas Resources

The UK still has substantial oil and gas reserves remaining despite having produced just over 36 billion boe over the last 40 years. Based on the latest DTI figures, Oil & Gas UK estimates that there are somewhere between 16 and 25 billion boe still to be recovered, with current trends delivering about 20 billion boe.

It should be noted that the “25 billion boe” figure is based on DTI’s mid-case view which still adopts a conservative approach to ultimate recovery rates. DTI’s high case implies that there could be up to 39 billion boe still to be recovered which provides an indication of the overall potential of the UKCS.

Figure 44: UKCS Projected Reserves and Resources

Figures 45 and 46 show the overall oil and gas reserves/resources split by sector of the UKCS. Current projections suggest the overall split is weighted 66% oil and 34% gas.

Almost half of the remaining reserves are located in the central North Sea, followed by around 25% to the west of the Shetlands and slightly over 15% in the northern North Sea. The southern North Sea and the Irish Sea complete the picture with 10% and 2% of the total, respectively.

Figure 45: UKCS Oil Reserves and Resources by Sector

Figure 46: UKCS Gas Reserves and Resources by Sector

During 2006, Oil & Gas UK commissioned consultants Wood Mackenzie to update a previous study, in 2004, on the economic life of infrastructure and whether the UK will be able to develop fully its remaining oil and gas reserves. The outcome from that study, combined with data provided by DTI, has helped Oil & Gas UK to understand the size of the opportunity from yet-to-find and undeveloped resources and its impact on the life of transport infrastructure. The main conclusions of the study are:

• more needs to be done to maximise UKCS recovery. As indicated above, recent trends project the future recovery of 20 billion boe, but, if the industry can improve its investment efficiency, an additional five or more billion boe could be developed which means there is a significant prize to aim for;


• there is an estimated 4 billion boe still to be recovered from currently producing fields (“brownfields”) in addition to the 1 billion boe of incremental projects already planned by companies;


• unless activity is sustained, some 45% of infrastructure could be decommissioned by 2020; however, this could be delayed by 10-15 years in many systems, with an appropriate fiscal and regulatory regime if investors remain sufficiently confident.

Figure 47: Tale of Two Futures (2006 data)

Inevitably with maturity, the existing producing base is declining rapidly and would only provide 8% of the nation’s oil and gas in 2020. Current investment plans should lead to double this proportion. However, if the industry and government together rise to the challenge and ensure that investment is sustained, the UKCS has a long and productive future ahead of it and could still be providing some 40% of the nation’s oil and gas requirements in 2020, a major prize and one which would significantly aid security of supply (see Figure 47).