The British government and economy have historically relied heavily on oil and gas revenues from fields in the North Sea, yet production from the region has been in constant decline over the past decade or so. Many of the fields are coming to the end of their days and the British economy is feeling the strain.
Any attempt to revive the economy would be hugely boosted by an increase in production from the North Sea, and with this in mind Britain has just launched its 28th tender for oil and gas licences. It has opened up new areas for drilling and exploration, hoping for some large discoveries to provide vital tax revenue and create new jobs.
The last round of licences offered out was in November, when the energy ministry awarded a record 219 licences, trying to attract explorers to the area before the existing infrastructure in place is decommissioned. This new round is expected to also attract a lot of interest, and the government will be accepting all submissions for new licences up until the 25th of April.
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Michael Fallon, the UK Energy Minister, said that "there continues to be extremely high level of interest in North Sea oil and gas, which is unsurprising when there could be as many as 20 billion barrels of oil still buried deep within the seabed."
The North Sea oil fields, shared with Great Britain and Norway, were once rich in crude oil and natural gas, but production peaked around the turn of the century and has been in constant decline ever since. The aged infrastructure is coming to the end of its operational life, and knowing this the British government is keen to boost activity in the region before the end, aware that expecting companies to invest in new infrastructure will be a tall ask.
Last year, 36 new offshore oil and gas projects were approved by the government, creating nearly £6.5 billion ($10.8 billion) in tax revenue and another estimated £5 billion in taxes from its effect on the wider supply chain sectors.
As well as the North Sea, the British government is also hoping that investment in fracking sites around the country will help create a new source of natural gas in the form of a shale boom, helping them to reduce dependence on foreign imports. It is thought that the energy ministry will launch an onshore licensing round early in the summer.
By. James Burgess of Oilprice.com
James Burgess studied Business Management at the University of Nottingham. He has worked in property development, chartered surveying, marketing, law, and accounts. He has also… More