New study suggests Scotland set for new North Sea Oil Bonanza

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  By Martin Kelly
 
New oil discoveries in the North Sea will ensure the industry thrives for decades, according to one the industry’s most respected experts.
 
In a new academic paper published today, Professor Alex Kemp has predicted over 150 new oil fields will be discovered that will take the industry well beyond 2050.

The Aberdeen University academic used detailed financial modelling to list 99 projects he said were “commercially viable” over the next thirty years.  Professor Kemp also highlighted a further 58 fields he said would become economic after 2050 due to advances in technology.

In the paper he highlighted an additional 147 already discovered fields which are not yet at the detailed planning stage and 25 fields currently “being assessed” for development.  The study factored in Government tax relief for companies and oil prices which Professor Kemp said would be “much higher” after 2050.

Publication of the new study was welcomed by Energy Minister Fergus Ewing, who said the figures proved the North Sea has a “bright future”.

Speaking to magazine Energy Voice, he said: “Whilst the No campaign like to talk down Scotland’s oil wealth – despite enjoying the riches that flow from it into the London Treasury – this expert opinion makes clear that Scotland’s oil and gas story is far from over.

“Under the UK’s poor stewardship of North Sea oil and gas we have seen frequent changes to the tax regime, a lack of focus on value creation and mismanagement of revenues.

“These are all mistakes which cannot be allowed to continue for the decades of oil and gas recovery which remain ahead.”

In the paper, Prof Kemp said: “New commercially viable developments triggered over the period to 2050 include not only 25 fields currently being assessed for development, but 147 discovered fields not yet at the detailed planning stage, and 99 further discoveries resulting from new exploration over the period to 2045.

“At the year 2050 in our model there are also 58 new discoveries made between 2014 and 2045 which contain well over 1 billion boe (barrels of oil equivalent) but are uneconomic. Again, it can be expected that, with higher oil prices, some will become economic.

“But, even the most bearish commentators on the oil market would agree that by 2050 real oil prices are likely to be much higher, and thus more developments should be triggered by that time.”

The new paper follows comments from a former head of one of the world’s biggest oil and gas companies who said unconventional oil and gas reserves not yet factored into calculations could be a “game changer”.

Derek Blackwood, former president of the Wood Group in the Americas, was commenting on data relating to unconventional oil and gas reserves in Scottish waters.

He said: “While I have not had the opportunity to study the geological evaluations for offshore unconventional hydrocarbons, the information provided appears to me to be impressive.

“One constant in all of the data related to the US onshore shale development story is that projections of production from shale plays has in my experience increased significantly each and every year over the last five years and will likely continue for years to come.

“We have less data available in the UK from drilled wells but I fully expect that as we drill more wells we will increase our projections of recoverable hydrocarbons similar to the USA and I think the term ‘game changer’ is likely to be very appropriate to the UK North Sea story.”

Mr Blackwood’s comments were echoed by Professor John Howell, chair in petroleum geology at Aberdeen University, who said: “We know that shale-gas and more recently shale-oil has revolutionised the US energy markets and is transforming their economy.

“We also know that the Kimmeridge Clay is a major oil-rich shale, which has generated most of the conventional oil in the North Sea. Its shale-oil potential is not in question.”

The academic questined the reluctance of the UK Government to acknowledge the potential massive reserves, recently estimated at over 20 billion barrels, and added:

“Why the Westminster government is so reluctant to recognise anything like the full potential of the North Sea oil and gas industry is very difficult to understand.

“Once again we see how the ingenuity of the oil exploration community continues to add huge potential resources to the already proven reserves of the North Sea.”

A recent report suggested that unconventional offshore oil and gas could double Scotland’s known reserves.

Commenting on the remarks by the former Wood Group chief, Fergus Ewing said:

“These comments from a very senior industry figure shows the strong enthusiasm and possibilities which remain for Scotland’s oil and gas sector.

“Scotland has decades of oil and gas reserves remaining, massive resources which will be developed by an industry which is world leading, and we are hearing of huge new potential both west of Shetland and in terms of offshore unconventional oil and gas. 

“As with all such developments we have to ensure that the appropriate environmental regulation is in place and Scotland is rightly taking a cautious, considered and evidenced-based approach to onshore unconventional oil and gas.

“What is crucial is that Scotland has the powers of independence to ensure that it is the people of Scotland that benefit from the riches of the North Sea – not the Westminster Treasury that squanders them.”