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At Least 9 More Decades for North Sea Oil

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At Least 9 More Decades for North Sea Oil

Oil and gas production in the UK North Sea can continue until the end of this century provided the right government policy decisions are made, according to Scottish Energy Minister Fergus Ewing.

Speaking to Rigzone at the Offshore Technology Conference in Houston Tuesday afternoon, Ewing said:

"In domestic terms, the [Scottish] industry is having a second major opportunity with a huge number of major new developments going ahead, some of which are extensions of existing developments. For example, the Clair Ridge field has the potential to produce oil until 2055 according to BP."

Clair Ridge is a project to further develop the Clair field with additional fixed platforms.

"The Clair field was actually discovered in 1977, and that's ironic because we were told by London that the oil would run out in the 90s, and then in the 90s that it was going to run out in the Noughties," Ewing said.

"I think it's a theme that's losing credibility because if BP comes along and says the Clair Ridge field will continue to produce until 2055 it's a bit liberal to say the oil is going to run out because it ain't."

Ewing said that there were "huge opportunities" domestically for the Scottish oil and gas sector that would keep oil and gas production going.

"My personal view is that oil and gas production [offshore Scotland] will continue for the rest of the century provided we make the right policy decisions," he said.

But Ewing insisted that fiscal stability is required and that a lot of damage to the sector was caused by the unexpected tax hikes that were introduced in the UK in 2011.

"Fortunately, a lot of that damage was undone the following year when the UK Treasury realized they had unsettled the whole industry, internationally, and shaken confidence in the viability of investing in the North Sea and west of Shetland. So, they then introduced measures on field allowances and decommissioning which we've welcomed. But in order to make sure that the longevity of the basin, especially in the southern North Sea, is as it should be there will no doubt be a need for more fiscal incentives than there are now," Ewing said.

"It's blindingly obvious that if it costs an extra $20 or $30 a barrel to get more oil out and if major operators have to invest hundreds of millions, if not billions, to do so then they have the choice of making that investment in fields where the oil does not cost an extra $20 or $30 a barrel, and therefore there does need to be a partnership between government and industry."

"The impression I get is that they realized they made a big mistake and they acted to try to correct that and with a deal of success. But the danger is that perhaps in the Treasury they feel that it is currently a situation of 'Problem solved!' and complacency is the most dangerous attitude that you can have in government because almost always the problems are more complex than you realize."



A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com

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