Signs suggest that the oil and gas industry in the UK is starting to show signs of optimism after two years of gloom. There was certainly a high demand for fuel over the winter and new exploration licences and significant oil field discoveries hint at the possibility of better times ahead, so much so that the Scottish Energy Minister believes the industry needs to be “future proofed” to ensure the success of this expansion.
New Exploration Licences Granted
The Department of Energy and Climate Change granted 25 licences for oil exploration this year. Despite this being a significant fall since the last round of licensing in 2014/15, the Oil and Gas Authority said they are “high encouraged” by this dedication to exploration in the midst of such low oil prices. The regulator stimulated interest in exploration when it spent £20million commissioning seismic surveys in two areas around Scotland. Geologists at the University of Aberdeen analysed the results and have suggested that there may be reserves in the Rockall region which had previously been dismissed.
Hurricane’s Huge Discovery
Oil exploration company, Hurricane Energy, have made an even more significant discovery of a very large oil field in the Greater Lancaster Area, 60 miles west of Shetland. They believe there could be as much as a billion barrels of recoverable oil in this area and hope to start production in 2019. Hurricane discovered oil in two wells drilled 30kms apart. Chief executive of Oil and Gas UK, Deirdre Michie, stated that she found this news to be very welcome and exciting but further investment was needed in the area. She also said that, "There are still up to 20bn barrels of oil and gas to go after in the UK continental shelf and we believe that makes the basin a very positive investment prospect indeed."
Future Proofing the Oil and Gas Industry in Scotland
Scottish Energy Minister, Paul Wheelhouse, shares Michie’s optimism along with her belief that further investment in necessary, not just in exploration and production, but also in the supply chain serving the industry. He calls for a “long term vision” for the industry rather than focusing on short term revenue. Examples he gave for the ways the industry is planning for the future included a £12million Transition Training Fund, £12.5million to support innovation and business resilience plus a further £5million Decommissioning Challenge Fund. He also mentioned the opening of the Oil and Gas Technology Centre as a way Aberdeen was committed to furthering oil and gas technology and driving growth in the industry.
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