Oil & Gas UK Economic Report 2014

Figure 44: Field Allowances Applicable to the UK Continental Shelf

1

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 40 million and 55 million tonnes • 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/or gas produced (see note 2 below) • Project has been granted consent by the Department of Energy & Climate Change through an addendum to a Field Development Plan

2

Small Fields (see also below, March 2012) Ultra High Pressure/ High Temperature (HPHT)

Up to £75 million Up to £800 million

March 2009

March 2009

3

Ultra Heavy Oil

£800 million

March 2009

Deep Water Gas

Up to £800 million

January 2010

4

5

Small Fields (as amended)

Up to £150 million £3,000 million

March 2012

Large Deep Water Oil

March 2012

6

Large Shallow Water Gas

Up to £500 million

July 2012

7

Brown Field Allowance Up to

September 2012

8

£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 FA, it can only claim the higher one, with the exception of fields that subsequently qualify for a Brown Field Allowance which is available in addition to other categories of FA.

2. The conversion of oil from tonnes into barrels varies depending on the density of liquids from each reservoir. For illustrative purposes, for a light sweet blend, such as Brent, the conversion is 7.55 barrels to one tonne. For gas, the conversion is 1,100 cubic metres per tonne.

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ECONOMIC REPORT 2014