ECONOMIC REPORT 2013
45
Recent Developments with Field Allowances
During 2012, there were a number of
extensions to the FAs, as follows:
• A new class of FA was introduced in
March 2012 for deep water oil fields with
a pre-tax value of £3,000 million. This
enabled a consortium led by Chevron
to continue with its development of the
Rosebank field to the west of Shetland.
• Also in March 2012, the Small Field
Allowance was increased in value to
£150 million pre-tax and in scope to
cover fields up to 50 million boe of
recoverable reserves.
• In July 2012, another new FA was
introduced with a £500 million pre-tax
value for large, shallow water gas fields.
The most significant change occurred in
September 2012, when the FA concept, which
had only previously been applied to new fields,
was extended to cover incremental investment
projects in fields already in production.
The resulting BFA was the culmination of over
12 months of work, led by Oil & Gas UK, with the
government and industry.
It introduced a capital cost based allowance per
project, scaled with its size. As long as the capital
costs exceed £60 per tonne of recoverable
oil (approximately $12/bbl), the allowance is
available for each tonne that the project is
expected to recover. The BFA is calculated on
estimated capital expenditure and estimated
reserves to be recovered at the time the project
is granted development consent.
Figure 33: The Brownfield Allowance
