Regulator cuts UK oil and gas estimates

The oil and gas offshore industry regulator has reduced its estimates of the amount of known oil and gas left under UK waters.

The amount in known reserves and capable of extraction has dropped from 6.3 billion barrels to 5.7 billion, over the year to the end of 2016.

The central estimate by the Oil and Gas Authority (OGA) was 7.8 billion barrels at the end of 2014.

That was when the oil price had just begun to fall.

However, all these estimated OGA figures have wide variations on the possible outcomes.

The latest estimate, published on Tuesday, is seen as being enough to sustain some production for at least the next two decades.

The estimates draw on a detailed survey by the Aberdeen-based industry regulator of the operators of more than 300 offshore oil and gas fields.

For comparison, the study points out that 43.5 billion barrels of oil and its gas equivalent have been extracted from UK waters since the offshore industry began production in the 1970s.

This has been rising at a slower rate since the start of this century, although new investment has helped increase the production rate slightly over the past two years.

The big shortfall in sustaining the industry is in replacing reserves with new finds.

Recent years have seen very low levels of exploration, and also of success in those wells being drilled.

During 2016, the OGA estimated that 600 million barrels of oil and gas were extracted from UK fields. But only 80 million barrels were moved from being commercially unviable reserves to being commercially viable and ready for investment.

New discoveries totalled only 210 million barrels of estimated reserves - so, taken together, only about half the rate at which new reserves were required to replace those being extracted.

However, a reappraisal of the industry approach to estimating undiscovered reserves makes for a more upbeat result. The OGA has estimated there are six billion barrels remaining to be found.

That is the central point in a wide range of possibilities, from 1.9 billion barrels to 9.2 billion. The estimate for the end of 2015 and also in 2014 was 3.6 billion.

OGA operations director Gunther Newcombe said: "The UKCS is a world class petroleum province with 10 to 20 billion barrels of remaining discovered and undiscovered potential.

"The OGA has an important role in helping to steward this resource base, revitalise exploration and maximise economic recovery, working closely with industry and government.

"Future success of the basin requires attracting additional investment, implementing technology and company collaboration on new and existing developments."