UK "has billions of barrels of oil" - but extracting it is more and more costlyNews // August 11, 2014
As broker Seabrokers reported recently, the Department of Energy & Climate Change (DECC) in the UK published its updated annual oil and gas estimates in July.
This shows that UK oil and gas reserves and resources are in the range of 11.1 to 21.0 billion barrels of oil equivalent (boe).
These estimates do not include figures for shale gas or shale oil because exploration
for shale resources is still very much in its infancy in the UK.
DECC further noted that while these figures show there is still a lot of potential remaining in UK energy reserves, it also further underlines the importance of greater collaboration and efficiency within the industry.
Seabrokers noted that, with this in mind, the UK government is now fast tracking
the recommendations that were made in Sir Ian Wood’s recent Wood Review in order
to maximise the potential of the North Sea.
Despite the apparent magnitude of the reserves remaining in the UK sector of the North Sea, a report by business advisory firm Deloitte found that exploration and appraisal (E&A) drilling has been declining recently, with only seven E&A wells drilled on the UK continental shelf in the second quarter of 2014.
This is significantly lower than the 17 E&A wells that were drilled in the equivalent period in 2013, and the 12 E&A wells drilled in the first quarter of 2014.
Deloitte’s evaluation of this trend suggested that rising costs were a significant contributory factor, with research suggesting that the cost of extracting a barrel of
oil from the North Sea is now five times more expensive than it was in 2001.