Shetland May Usher in Oil Industry Revival in the UK
UK’s oil and gas production has been on a continuous decline for almost 14 years now; that is why news about record oil investments in the country’s deepwater oil fields is highly anticipated.
According to a leading UK energy group, about $65 billion worth of oil exploration and development funds will be flowing into the country starting this year. Analysts forecast that new investments could yield a daily output of 2 million barrels for UK within the medium term – a significant growth of more than one-third.
Analysts reveal that the current crude oil prices and continued price stability have motivated investors to revive UK-based projects and pour in additional funds for further exploration. Not too long ago, the country experienced a financial slump alongside a discouraging decline in crude oil prices. This has prompted oil firms to shelve some of their projects.
While an oil tax hike was implemented in 2011, the UK government continues to give out tax discounts to qualified investors and, eventually, boost oil exploration and production. Clearly, government is also pushing for cuts in the country’s increasing dependence on foreign oil. As of 2011, more than 30 percent of its total oil requirements are sourced abroad.
A good chunk of said investments will be concentrated on UK’s Shetland deepwater oil fields. Shetland is composed of about 100 islands near the northern part of Scotland.
Oil major Total is investing $5.1 billion, which will be expended on projects like construction of a gas processing plant in Laggan and Tormore oil fields, northwest of the island. Another $10 billion will be invested collectively by BP, Shell, ConocoPhillips, and Chevron in oil fields located in the western part of said region.
Mike Tholen, an economist, announced that these oil majors who continue to invest in oil exploration in Shetland despite severe weather conditions will help boost the industry. He is optimistic that the country’s oil and gas sector will regain its glory days.
However, some experts estimate that larger and more productive oil fields must be discovered within a five-year time frame to somehow mitigate the UK’s declining oil outputs. Smaller finds will not suffice, they added.
Based on International Energy Agency’s 2012 forecast on global energy, oil production from non-OPEC countries will plunge as oil fields in the North Sea reach maturity. The Agency mentioned UK and Norway as two leading countries that would experience heavy declines in oil output come 2035.