Up to 900 million barrels of UK oil reserves could end up abandoned unless ageing fields are exempted from carbon trading, according to Talisman Energy’s CEO.
Speaking at the Offshore Europe conference in Aberdeen this week, Talisman’s president and CEO John Manzoni said that plans to extend the European carbon trading scheme to such fields would make them uneconomic.
He estimated that the carbon trading scheme rules might force Talisman to abandon 50 million barrels-worth of reserves, Scotland’s Herald newspaper reported.
“Older fields have higher costs with relatively low throughputs, even though they still have significant oil in place. If we have to buy carbon permits it will result in earlier abandonment,” he said.
Manzoni said that his company was already investing overseas rather than in UK territorial waters because he could get “better rates of return”.
Chairman of oil explorer John Wood Group Sir Ian Wood told an audience at the conference that the UK Government could be missing out on a share of a £1tn prize unless it improved the regulatory regime.
He warned that tax revenues from the remaining 13 billion to 25 billion barrels of North Sea reserves would be unlikely to be extracted as things stood, comparing his industry with the “huge subsidies” received by the renewable sector, the Herald reported.