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Released September 15, 2021 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--Oil and gas firms are set to spend £21 billion (US$29 billion) on projects in the U.K. North Sea over the next five years.
This investment would unlock 2.7 billion barrels of oil equivalent (boe) over the production period of 2021-25 according to the flagship Economic Report by the sector's Oil and Gas UK (OGUK) organisation. However, the report stated that less than one-third of this (£6.6 billion) has been fully committed by companies. In a "no-further-investment" case, total capital could fall to less than £1 billion per year by the middle of the decade. The group maintained that a loss of investment would result in the U.K. becoming "increasingly reliant on international sources of oil and gas, without having any impact on levels of consumption".
The U.K.'s primary energy needs are met by oil and gas followed by bioenergy and waste, renewables, nuclear and imported electricity. Oil and gas met an estimated 73% of the country's energy total in 2020, with production from the U.K. Continental Shelf (UKCS) providing around 70%--enough to meet 95% of oil demand and 54% of gas demand. The sector also suffered throughout the pandemic, with energy consumption falling to its lowest levels since the 1950s and project activity stalling.
The report has warned that the U.K. faces a stark energy choice: invest in its offshore industry to build energy security, jobs, and a managed green transition or rely on other countries for its energy needs. It pointed to gas imports hitting a record high in winter 2021, with the country having to import 56% of the gas needed for homes and power stations between January and March. The U.K. is one of Europe's biggest consumers of gas--generating 35% of its power and heating 23 million homes. Demand spiked as the U.K.'s own production was hit due to the pandemic.
OGUK chief executive Deirdre Michie said: "Oil and gas provided nearly three-quarters of the U.K.'s total energy last year, and we will continue to rely on them to heat our homes, keep our lights on and create many of our everyday essentials from medicines to mobile phones to road surfaces. About 85% of U.K. homes are still heated by gas but imported gas hit a record high last year. While the U.K. continues to use oil and gas, we should make the most of the resources we produce here. The North Sea Transition Deal reduces the need for imported energy, makes us more responsible for our own emissions and supports U.K. companies and people who are already investing in cleaner energy."
She explained that government support for the industry is vital to maintaining energy security, jobs and a shift to cleaner production. "We all know that change is needed so the question is how fast we make that change? This report shows the reality that cutting off the domestic production of oil and gas faster than we can reduce demand risks leaving us increasingly dependent on other countries that often generate higher emissions. Cutting back our greenhouse gas emissions will not be easy, but we will do it faster if we support the companies and people who have the skills to get us there."
One of the leading projects in the U.K. Continental Shelf (UKCS) is Siccar Point's Cambo development project, located 125 kilometres northwest of the Shetland Islands and considered to be one of the largest undeveloped fields in the UKCS. Offshore development work on the project was due to start last year, with drilling commencing this summer, but this was postponed due to the pandemic. Drilling operations are now scheduled for next year and the first production is expected in 2025. Industrial Info is tracking the five key Cambo projects, worth a combined US$606 million.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
This investment would unlock 2.7 billion barrels of oil equivalent (boe) over the production period of 2021-25 according to the flagship Economic Report by the sector's Oil and Gas UK (OGUK) organisation. However, the report stated that less than one-third of this (£6.6 billion) has been fully committed by companies. In a "no-further-investment" case, total capital could fall to less than £1 billion per year by the middle of the decade. The group maintained that a loss of investment would result in the U.K. becoming "increasingly reliant on international sources of oil and gas, without having any impact on levels of consumption".
The U.K.'s primary energy needs are met by oil and gas followed by bioenergy and waste, renewables, nuclear and imported electricity. Oil and gas met an estimated 73% of the country's energy total in 2020, with production from the U.K. Continental Shelf (UKCS) providing around 70%--enough to meet 95% of oil demand and 54% of gas demand. The sector also suffered throughout the pandemic, with energy consumption falling to its lowest levels since the 1950s and project activity stalling.
The report has warned that the U.K. faces a stark energy choice: invest in its offshore industry to build energy security, jobs, and a managed green transition or rely on other countries for its energy needs. It pointed to gas imports hitting a record high in winter 2021, with the country having to import 56% of the gas needed for homes and power stations between January and March. The U.K. is one of Europe's biggest consumers of gas--generating 35% of its power and heating 23 million homes. Demand spiked as the U.K.'s own production was hit due to the pandemic.
OGUK chief executive Deirdre Michie said: "Oil and gas provided nearly three-quarters of the U.K.'s total energy last year, and we will continue to rely on them to heat our homes, keep our lights on and create many of our everyday essentials from medicines to mobile phones to road surfaces. About 85% of U.K. homes are still heated by gas but imported gas hit a record high last year. While the U.K. continues to use oil and gas, we should make the most of the resources we produce here. The North Sea Transition Deal reduces the need for imported energy, makes us more responsible for our own emissions and supports U.K. companies and people who are already investing in cleaner energy."
She explained that government support for the industry is vital to maintaining energy security, jobs and a shift to cleaner production. "We all know that change is needed so the question is how fast we make that change? This report shows the reality that cutting off the domestic production of oil and gas faster than we can reduce demand risks leaving us increasingly dependent on other countries that often generate higher emissions. Cutting back our greenhouse gas emissions will not be easy, but we will do it faster if we support the companies and people who have the skills to get us there."
One of the leading projects in the U.K. Continental Shelf (UKCS) is Siccar Point's Cambo development project, located 125 kilometres northwest of the Shetland Islands and considered to be one of the largest undeveloped fields in the UKCS. Offshore development work on the project was due to start last year, with drilling commencing this summer, but this was postponed due to the pandemic. Drilling operations are now scheduled for next year and the first production is expected in 2025. Industrial Info is tracking the five key Cambo projects, worth a combined US$606 million.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
