Economic Report 2013

After this current wave of investment, it is anticipated that capital investment may fall to around £8-10 billion a year from 2015 (in 2012 money). However, were the rate of investment to be below this, at around £6-8 billion per annum, it would probably be insufficient to sustain current rates of production and the programme of works on asset integrity. On the other hand, if investment were to rise significantly above its current rate, it would apply additional inflationary pressure, as the capacity of the supply chain would become yet more stretched. It is expected that a number of large new field developments of at least 100 million boe of recoverable reserves will materialise in the coming years, including Rosebank, Bressay and further development of the

Clair field. Additionally, there is a renewed drive to recover more from existing fields which should ensure the UKCS remains healthy. This is being achieved through improved reservoir management, enhanced oil recovery (EOR) and other such techniques, together with continued investment in many smaller opportunities. All this will need to be supported by the necessary investment to extend the life of critical infrastructure. The costs of operating the fields and their assets across the UKCS totalled £7.7 billion in 2012, an increase of ten per cent from the previous year. A further ten per cent increase is expected in 2013, such that Oil & Gas UK estimates that total operating expenditure will reach £8.5 billion for the year. Operating Expenditure

Figure 17: Rise in UKCS Operating Costs

9

8

7

6

5

£ Billion (2012 Money)

4

3 0

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Source: Oil & Gas UK

26

ECONOMIC REPORT 2013