Activity Survey 2015

Figure 10: Reserves by Probability of Proceeding

1

14

Sanctioned Probable Possible

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2

10

3

8

6

4

4

2

Total Reserves in Company Plans (Billion boe)

5

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Oil & Gas UK In 2014, 519 million boe were extracted from the UKCS, but only 160 million boe were progressed to sanction and around 50 million boe of potentially commercial reserves were discovered through exploration activity. The current reserves replacement ratio must improve if the UKCS is to have a long-term future. Both industry and government are aware of the size of the prize at stake and the competitive pressures on the UKCS in the current business environment. Investment Required The remaining reserves will require significant outlay if they are to be developed and, as such, current estimates show that around £64 billion of capital must be invested to realise the P50 potential in current company plans. Almost £38 billion of that has already been committed, but even some of that investment is being re-assessed at a time when capital is highly constrained and potential revenues are falling rapidly. The UK must be globally competitive if it is to safeguard existing projects and attract the additional £26 billion of investment that is required to develop the P50 reserves in company plans. The need for this investment is time sensitive as these projects can only proceed while key pieces of UKCS infrastructure remain in place. A further £30 billion of investment will be needed to develop the ‘possible’ reserve base in company plans, although there is little sign of this occurring currently. An affordable cost base, a competitive fiscal regime and a regulator that will ably facilitate the swift development of these reserves are all essential for ‘probable’ and ‘possible’ projects to mature to certain projects. Extracting these reserves over time will not only provide security of primary energy supply and balance of payments benefits for the UK economy, but it will help ensure that the UK’s world-class supply chain remains a provider of hundreds of thousands of highly skilled and well-paid jobs throughout the country.

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