North Sea oil production to continue well beyond 2050 says leading academic

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  By Martin Kelly
 
Oil production in the North Sea “can confidently be expected to remain viable beyond 2050” one of the industry’s most respected academics has said.
 
Professor Alex Kemp has said advances in technology coupled with government incentives would see production continue as previously uneconomic fields become commercially viable.

Technical advances, he said, “will result in rates of oil recovery higher than the present average”.

The UK Government in the eighties, he said, had forecast a “continued production decline into the nineties.”  However, said Professor Kemp: “In the event, technological advances, such as long reach horizontal drilling and 3D (and later 4D) seismic, plus cost reductions and favourable tax treatment for new developments, reversed the decline in a fairly spectacular fashion.”

Kemp, one of the most respected voices in the oil and gas industry, made the comments in an article in industry magazine Energy Voice.

Countering comments by Sir Ian Wood who had recently said there would be “very low levels of production by 2050”, the academic said: “The year 2050 is a convenient date at which to stop detailed modelling. But the industry will continue beyond that date. Some existing fields such as Clair can confidently be expected to remain viable beyond 2050.”

The Clair field has been described by oil giant BP as “massive” and the company is employing a new advanced technique in order to maximise recovery.

The Aberdeen University academic said production efficiency and access to infrastructure coupled with tax reliefs could incentivise further field developments resulting in a total plausible range of 15-16.5billion boe over the period to 2050 – a figure recently cited by Sir Ian Wood.

However, in contrast to Wood’s claim that: “Scotland will have little offshore oil and gas production” beyond 2050, Professor Kemp said:

“Further, in our comprehensive database, no fewer than 125 known existing discoveries remain undeveloped at 2050 because they are not commercially viable at the $90 (real) oil price.

“In aggregate they contain total potential recoverable reserves in the range 2.5-3billion boe.”

Whilst acknowledging that some fields may never be commercially viable, Professor Kemp added:

“But, even the most bearish commentators on the oil market would agree that, by 2050, real oil prices are likely to be much higher. Thus more developments should be triggered by that time, even with the expected reduction in infrastructure availability.

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

“Over the longer term, technological advances can also be expected which will result in rates of oil recovery higher than the present average of around 45%.”

The comments by the academic have been welcomed by SNP Energy Spokesperson Fergus Ewing.

Responding to Professor Kemp’s comments Mr Ewing said:
 
“Professor Alex Kemp is one of the world’s leading oil economists, wrote the official history of North Sea oil and has detailed modelling on the future of Scotland’s oil and gas industry.  I thus warmly welcome his prediction that Scotland’s oil and gas industry will make a significant contribution well beyond 2050.
 
“It’s also particularly interesting to note his views on the impact of technological advances on Scotland’s oil and gas sector, his prediction than oil recovery rates will improve and that more fields may  be reopened as technology improves further. Especially as he highlights the Miller field where there is the reported potential of around a further 40 million barrels.
 
“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 value terms half the wealth from Scotland’s oil remains and by grabbing the independence opportunity later this month we can put an end to poor UK stewardship of this vital resource.
 
“Scotland deserves better and only a Yes vote on September 18 will deliver the powers needed to get the maximum benefit from Scotland’s natural resources.”