UK could beat oil production forecast by 30% with $21.5 billion in new investments

(Bloomberg) – The UK could be pumping almost 30% more oil and gas than currently projected at the end of the decade if about £20 billion ($21.48 billion) of new investment can be secured, according to an offshore industry group.

“Improved recovery rates and slower decline are both achievable but only if investment can be secured,” said Offshore Energies UK. “Government decisions following next month’s election offer the opportunity to focus on a homegrown energy transition which could secure the livelihoods of hundreds of thousands of highly skilled people.”

The country’s current daily production of about 1.2 MMboed is projected to drop to 0.7 MMboed in 2030 by industry regulator the North Sea Transition Authority. “Getting things right” and moving forward all investment opportunities currently under consideration by companies would temper that decline, meaning production in 2030 would be 0.9 MMboed, OEUK said in its Economy and People report on Tuesday.

On the other hand, if investments dry up, the nation might be pumping just 0.6 MMboed at the end of the decade. 

The warning from the offshore industry comes less than three weeks before the UK’s general election, with a series of opinion polls suggesting Keir Starmer’s Labour Party is heading for victory over Rishi Sunak’s Conservatives. Labour plans to stop issuing new oil and gas exploration licenses, arguing that they won’t reduce household energy bills and will contribute to worsening the climate crisis. The party also aims to raise the windfall tax on oil and gas by 3 percentage points.

If the UK’s remaining oil and gas reserves are to be developed, OEUK asked for the removal of windfall tax before 2029, as well as ongoing licensing subject to climate compatibility checkpoints.

“About 60% of the resources yet to be approved could be produced in the next 10 years,” OEUK said. “Around half of the remaining resources are in fields that are already producing, with the others in new fields.”

There is potential in the oil and gas industry to spend £144 billion through to 2040, including on decommissioning existing fields, but “conditions need to be right to unlock activity,” according to the OEUK report.

Oil and gas provides around 120,000 jobs, or almost 80% of jobs directly or indirectly supported by UK offshore energy, which includes fossil fuels, offshore wind, carbon capture and storage and hydrogen, according to estimates from Aberdeen’s Robert Gordon University.