North’s booming oil and gas sector gets a boost

Jul 9 2008 By Andrew Mernin

THE region’s booming oil and gas sector received a further boost yesterday as a new report estimated that there could be as much as 25 billion barrels of oil waiting to be extracted from the North Sea and other parts of the UK coast.

However, the report by offshore industry body Oil & Gas UK, also warned that the Government will have to work closely with the industry to unlock the reserves and called for further investment and exploration in the sector.

On the back of the surging price of oil – currently trading at around US$140 a barrel – the North East offshore sector is booming and, according to research made earlier this year, there are around 1,700 job vacancies in the industry.

There are currently around 5,000 people employed in the sector and at the current rate of growth experts say 10,000 staff will be needed by 2015.

Yesterday’s report said firms are currently planning to invest £21bn in the next five years, targeting around 2.7bn barrels, although there is substantially more left to recover.

The drive between the Government and the private sector to increase the level of oil being recovered from the North Sea could see even more business for flourishing North East firms such as Duco, Wellstream and SMD.

George Rafferty, chief executive of NOF Energy – the business development organisation for the oil, gas and energy-related sectors in the region – said yesterday’s report was more good news for the industry.

He also agreed that the Government needs to work more closely with industry to maximise the potential of North Sea oil reserves, although he also called for changes in the UK tax system.

He said: “It’s a fairly bright account of our industry. It’s important that Government and industry work together and put in place the right tax infrastructure, which is a fairly constant message. The industry also recognises it’s not just down to the Government to invest and there’s more that the Government and industry could do together to make sure they maximise the potential of the North Sea.”

Malcolm Webb, Oil & Gas UK’s chief executive, said: “There is little doubt that the need to maximise recovery of the UK’s remaining oil and gas reserves is a matter of national importance and one that is well understood by Government at the highest level.

“The UK’s oil and gas basin contains up to 25bn barrels of oil and gas that we could ultimately recover. Plans currently in place should reach about 10bn of those barrels so the challenge in the hands of the Government and industry is how to achieve the remaining 15bn barrels.”