Britain’s oil and gas industry has the potential to continue supporting 450,000 UK jobs to at least the end of this decade, an industry leader forecast yesterday.
Malcolm Webb said fresh opportunities abroad can support some jobs in the UK and even lead to thousands of new ones being created.
His upbeat view is in stark contrast to pessimists who suggest Britain’s oil and gas business is on its last legs.
Mr Webb, chief executive of Oil & Gas UK (OGUK), said the industry is at a “crucial crossroads” where investment from companies and fresh tax incentives by the UK Government would boost it into the next decade.
He was speaking as OGUK unveiled its latest activity survey in Aberdeen.
Britain produced 2.48million barrels of oil and gas a day in 2009 – down 6% on 2008. This decline reflected a 20% slowdown in capital expenditure since 2006.
OGUK predicts investment could rise above £5billion.
There were 73 potential new field developments in this year’s survey, compared with 56 a year ago. Most are in the central North Sea and the west of Shetland.
OGUK estimates that up to 25billion barrels of oil and gas remain to be recovered from UK waters.
West Aberdeenshire and Kincardine MP Sir Robert Smith said the figures confirmed the North Sea can continue to provide jobs and energy if ministers encourage long-term investment.
And Angus MP Mike Weir, the SNP’s energy spokesman, said it shows the industry has “a bright future”.
Business plans identified up to 11billion barrels of oil and gas in new and existing projects – up 15% on 2008 and requiring total capital expenditure of £60billion.
OGUK said that, provided this investment can be secured, the industry could still be delivering 1.5million barrels of oil and gas a day in 2020 – enough to satisfy half of total UK demand.
Mike Tholen, author of the report and OGUK economics director, said: “The increase in the number of new UK oil and gas developments under consideration is, on the one hand, encouraging.
“It confirms our belief that the province, whilst mature, has decades still to flourish. This is a hi-tech industry and companies have developed and continue to deploy the best and most advanced technology to unlock the UK’s oil and gas resources.
“However, even that is not proving enough, illustrated by the production decline and falling investment over recent years. Things are made no easier by the fall in wholesale gas prices which have halved over the last year.”
Last year saw a fall in the total number of UK wells drilled. Development wells were 22% down on 2008 at 130, while exploration and appraisal drilling fell 40% to 65 wells. Development approvals also slumped with only six new fields seeking UK Government sanction last year, compared with 12 in 2008. And there were only three projects in existing fields against 10 in 2008.
Mr Tholen felt employment in the UK oil and gas industry had “got off pretty lightly” in the recession, with a net loss of only a few thousand jobs.
Mr Webb said their worst fears had not been realised.
But he added: “Securing all the investments identified by our survey will demand action from industry to reduce costs and improve efficiency and from government to lower production taxes and lighten the UK and European Union regulatory burden.
“As recently noted by several government ministers, the UK’s oil and gas industry is a huge asset to this country. It not only makes a major contribution to the economy, but can also help secure energy supplies for decades to come. The government has taken several welcome steps over the last 18 months in reducing the rate of tax on various types of new fields. We now need to work together to extend that process to encompass other new and existing fields and positively encourage investment in the vital UK energy industry.”
Liberal Democrat MP Sir Robert said: “These figures confirm the major contribution to jobs and security of energy supplies that the North Sea can provide so long as the government encourages investment in the long term and does not treat the industry as a short-term fix for the cash crisis the Treasury is facing.”
Mr Weir, a member of the Commons energy and climate change committee, called for a stable tax regime and more incentives to invest in new finds.