Economic Report 2013

b) Field Allowances

Figure 48: Field Allowances Available for the UKCS

Name

Pre-Tax Value Qualification Criteria

Effective Date

(as per Field Development Plan consent) Central case recoverable reserves of up to 3.5 million tonnes (circa 25 million boe) Reservoir conditions exceeding pressures of 862 bar and temperature of 166 degrees Celsius Oil at API gravity below 18 degrees and viscosity exceeding 50 centipoise at reservoir temperature and pressure • The field is in water depths exceeding 300 metres • More than 75 per cent of the reserves comprise gas • Gas is to be transported for more than 60 kilometres along a new pipeline to relevant infrastructure Central case recoverable reserves of up to seven million tonnes (circa 50 million boe) • Central case recoverable reserves of between 25 million and 55 million tonnes (circa 187.5 – 412.5 million boe) • The field is in water depths exceeding 1,000 metres • Central case recoverable reserves of between 10 and 25 billion cubic metres • More than 95 per cent of the field’s reserves comprise gas • The field is in water depths less than 30 metres • Authorised project capital costs exceed £60 per incremental tonne of oil and gas produced • Project has been granted consent by the Department of Energy and Climate Change after 7 September 2012 by way of Field Development Plan Addendum (see main text for further details)

Small Fields

Up to £75 million Up to £800 million

March 2009

Ultra High Pressure/ High Temperature (HPHT)

March 2009

Ultra Heavy Oil

£800 million

March 2009

Deep Water Gas

Up to £800 million

January 2010

Small Fields [amended] Up to

March 2012

£150 million Up to £3,000 million

Large Deep Water Oil

March 2012

Large Shallow Water Gas

Up to £500 million

July 2012

Brown Field Allowance Up to

September 2012

£50/tonne, up to a cap of £250 million (£500 million if PRT paying) per project

Notes.

1. If a field qualifies for more than one field allowance then it can only claim the more valuable one, with the exception of fields that subsequently qualify for a Brown Field Allowance, which is available in addition to any of the other categories of field allowance. 2. The conversion of oil from tonnes into barrels varies depending on the density of the crude from each reservoir. For illustrative purposes only, a light sweet crude is around 0.132 tonnes. For gas the conversion is set at 1,100 cubic metres to equal one tonne.

72

ECONOMIC REPORT 2013