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The UK’s proven and probable (2P) oil and gas reserves as at end-2016 were 5.7 billion barrels of oil equivalent (boe), down from 6.3 billion boe at end-2015, due to production exceeding additions and reserves adjustments for producing fields, the UK’s Oil & Gas Authority said in a report published on Tuesday.
The UK still has significant oil and gas reserves capable of sustaining production from the UK Continental Shelf for another 20 years and more, but replacement of proven and probable reserves remains a concern, the authority said.
Last year, some 600 million boe were produced, but only 80 million boe of contingent resources were matured to reserves—such that can be commercially viable to explore. This translates into a reserve replacement ratio of 13 percent, which leads to an underlying decline of the proved resources, the Oil & Gas Authority warned.
The regulator estimates that the UKCS contains discovered undeveloped resources of 7.4 billion boe, with much of those resources in mature developed areas and under consideration for development. Although these resource developments are a significant opportunity, it will “require substantial investment in new field developments and incremental projects,” the authority said in its report.
In order to reach a reserves replacement ratio of 25 percent over the next five years, the UK oil and gas sector will need some US$11.9 billion (9 billion British pounds) of investment, at an average unit development cost of US$15.87 (12 British pounds) per boe.
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“Overall estimated ultimate recovery (EUR) grew during the 1970s, 80s and 90s. However EUR is now static as a result of low reserves replacement and recent reserves downgrades due to the fall in oil price,” the regulator said.
Based on geological attributes associated with some 3,000 identified leads and prospects, the authority’s central estimate is that the UK has prospective undiscovered resources of 6.0 billion boe, ranging from the lower estimate of 1.9 billion boe to the upper estimate of 9.2 billion boe.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.