The government must focus on exploiting the UK Continental Shelf (UKCS) to expedite recovery of its economic potential, says a new study by the researchers of University of Aberdeen.
The study also suggested expanding the country’s exploration activities and improving recoveries in oil fields through incremental projects, alongside reducing unplanned downtime and life extension of infrastructure with proper third party access.
The study warned that the United Kingdom will be unable reach the ultimate potential of the Continental Shelf, estimated to be about 20 billion barrels of oil equivalent (bn boe) by the DECC, even by 2050 at the current pace.
The research pegged the cumulative total hydrocarbon production in the next 30 years at 16.8 bn boe, expecting it to go up marginally to 17.5 bn boe by 2050.
The exploration related infrastructure is forecast to lose viability during the next few decades, posing difficulty in development of small fields and therefore increasing the number of undeveloped discoveries.
Researchers have also expressed a concern that recent tax allowances against Supplementary Charge (SC) for new field developments will only help high cost fields and urged for a similar scheme for small fields by doubling the size of the allowance and eligible fields.
The study highlighted the need to streamline the tax relief for SC and to set up rules for guaranteed tax relief for decommissioning, which are expected to strengthen the sector in the long term.
Calling for modifications to the brownfield allowance designed to support the high cost incremental projects, the study sought the inclusion of some costly EOR technologies, such as polymer flood schemes, in to the allowance.
Oil production is also anticipated to slide at a fast pace after increasing in the next few years, raising the inflation to 2.5% at the rate of $90 per barrel.
The field investment, which is estimated to be around £11.5bn for the current year, is also likely to decline in due course if new projects are not encouraged.
Against an operational expenditure of £173bn over a 30-year period, the field investment is expected to stay at £134bn, thus reflecting the high barrel costs in exploiting the UK Continental Shelf.
Researchers concluded that factors such as incentivisation of exploration, quick access to infrastructure and reduced unplanned downtime alone can drive new discoveries and help address the rising costs.
Image: The study calls for exploitation of huge untapped potential on the UKCS. Photo courtesy of Nasa.