By Martin Kelly
A newly published report has concluded that the amount of oil and gas waiting to be recovered from Scottish waters could be double that of current estimates.
The report, from business organisation N-56, has revealed that if unconventional reserves are included in current estimates it could result in billions more barrels of oil and gas being recovered.
According to the report, a “black gold bonanza” lies in wait from innovative proposals to recover offshore unconventional reserves from beneath the North Sea. The report shows that new techniques targeted at the Upper Jurassic Kimmeridge Clay formation could add at least an estimated 21 billion barrels to current estimates.
Key findings of the report include:
• Oil and gas recovered from the Upper Jurassic Kimmeridge Clay formation through new techniques could add an estimated 21 billion barrels, almost equivalent to the estimated 24 billion barrels of oil and gas reserves remaining.
• Up to an additional £300 billion in tax revenues though this 21 billion barrels to either the UK Treasury or a Scottish Government either independent or with full control of oil and gas revenues.
• Danish state-owned oil company, Nordsofonden, have described the Danish offshore unconventional shale oil and gas resource as “a potential game changer”.
According to the report, an innovative proposal to recover oil and gas through new techniques, would lead to a new ‘black gold bonanza’ that will see the operational life of the North Sea extended for another century. It says this is a view also shared by the UK Government.
The innovative proposal was revealed by world-renowned petroleum geophysicist Dr Christopher Cornford, at a major conference – ‘Unconventional Resources and Technology’ in Denver, Colorado, drawing together over 4,500 oil industry professionals.
The report says that by taking the drilling and horizontal fracturing technologies that have been pioneered in the USA, and applying these in an offshore setting, the proposal has the potential to reinvigorate the North Sea.
The new technique would see North Sea oil and gas revenues of up to a staggering £665 billion, more than double the total taxation from oil and gas received to date (£313 billion). By contrast, the UK’s economic watchdog, the Office for Budget Responsibility (OBR), has put this figure at £57billion between 2014 and 2040.
SNP Energy Spokesperson, Fergus Ewing MSP, welcomed the report which, if upper estimates were achieved, would double currently accepted figures for recoverable resource.
Mr Ewing said:
“This new report shows the strong possibilities in offshore unconventional and hard to reach oil and gas, and shows that when combined with existing reserves Scotland could have almost double the oil and gas reserves we previously thought.
“We welcome the report and are interested in exploring the huge potential benefits for the industry and the country that it represents. Its particularly interesting to note that the report suggests that both the UK and Danish Governments are taking this opportunity very seriously.
“Scotland is rightly taking a cautious, considered and evidenced-based approach to onshore unconventional oil and gas. That major opportunities are opening up for offshore unconventionals shows that the wealth of the North Sea can continue to deliver for the people of Scotland for many many years into the future
“What is crucial is that Scotland has the powers of independence to ensure that it is the people of Scotland that benefit from these riches – not the Westminster Treasury that squanders them.”
Mr Ewing also welcomed another new expert report from Investec Economics, which has confirmed that North Sea oil is a bonus and not the basis of Scotland’s economy.
London based Investec Economics said that it was a “misconception” that Scotland is poorer than the UK as a whole.
In a new paper the firm says that – even without North Sea output – Scotland and the rest of the UK’s economies are “roughly equal”, and adds that overall, Scotland’s GDP per head is “about 10% higher” than the rest of the UK’s.
Mr Ewing added: “This report backs what we have always said about North Sea oil – it is a fantastic bonus for Scotland’s economy, and not the basis of it.
“And it confirms that Scotland is significantly wealthier per head than the rest of the UK, meaning our economy has a very sound basis to start life as an independent country.”