Investing in oil and gas key for future of UKCSElise-Aldram via Pixabay

Investing in oil and gas key for future of UKCS

New UK oil and gas reserves report published by the OGA reiterates need for oil and gas whilst transitioning to net zero.

With the current level of proven and probable reserves (4.4 billion boe), UK production only lasts until 2030 on the basis of demand projections. That may be the most impactful conclusion from the UK Oil and Gas Reserves and Resources 2020 report that was published by the Oil and Gas Authority yesterday.

It is quite a stark outlook, which contrasts significantly to neighbour Norway where reserves stand at about four times as much and where production is only projected to start declining after 2030.

It means that the UK is very rapidly becoming even more reliant on import, even if demand may slightly decrease. It is for that reason that the OGA clearly states that maximising economic recovery of the UK’s remaining oil and gas is not in conflict with the energy transition.

Just looking at some 2020 numbers is enough to understand why reserves are rapidly declining. About 570 MMboe was produced last year, but only 270 MMboe were added to 2P reserves. In addition, reductions to existing field forecasts amount to around 450 MMboe. Part of this downgrade must be related to the significant downward revision of the Lancaster-Halifax development.

Progression of reserves and resources across the UKCS in 2020. Source.

Exploration results

UKCS exploration in 2020 added 212 MMboe of contingent resources, distributed amongst six discoveries. Given the very low number of exploration wells drilled on the UKCS, and the fact that Finzean drilled by TotalEnergies was most likely dry, a significant part of these volumes stated as exploration finds must come from Apache’s drilling efforts in the Beryl area (Quadrant 9) where the company is chasing the Eocene injectite play. Another part of this volume may come from TotalEnergie’s Isabella well (30/12d-11) that was completed in March 2020 and which is currently awaiting further appraisal.

3300 leads and prospects

Despite the bleak outlook in terms of reserves, the OGA’s database of leads and prospects still contains around 3300 mapped features. If a volume cut-off is being applied to those, with 10 MMboe in the North Sea and 30 MMboe in the West of Shetland, around 500 prospects and leads remain. Not surprisingly, the Central North Sea holds the most prospective resources at 1.6 billion boe at P50, which is testament to the variety of petroleum plays in this area compared to other parts of the UKCS.

Play-level prospective resources

However, in contrast to already mapped prospects and leads, when looking a step further into prospectivity at play level, it is the West of Shetland that holds the most potential. The OGA estimates that up to 4.7 billion barrels (P50) are still to be unlocked in this area, out of a total of 11.2 billion barrels across the entire UKCS.