Keep gas on the front burner

While a nationwide freeze and the world’s biggest windfarm licensing round hogged Britain’s headlines last month, Oil & Gas UK energy policy manager David Odling issued a timely reminder of the need to bolster indigenous gas production.

Calling on the government to further incentivise gas field investment, Odling said: ‘Oil & Gas UK believes that up to 1.5 trillion cubic metres of gas remain to be developed and produced from the UK continental shelf. Assuming domestic production and imports each satisfy half of our demand, this could last for some 30 years. However, gas projects must prove competitive enough to attract the required investment if these volumes are to be recovered.

While the new field allowance announced in the last UK Budget encouraged investment in some difficult fields, Odling urged that it be extended to apply more broadly – in particular to the remote West of Shetland region where a fifth of the country’s gas resources are estimated to lie (OE January). An extension of the allowance would help to attract the £2 billion investment required to bring this gas ashore, said Odling. In addition, a broadening of the rules around the new field allowance would promote investment in technically difficult gas and the reserves remaining in existing fields in the southern North Sea.

‘The ability of the UK gas market to respond to the recent cold snap and meet demand illustrates the importance of diversity in our gas supplies, which are in fact the most diverse in the European Union,’ Odling noted. ‘While additional storage capacity would play an important role in alleviating any tightness in the gas market during periods of high demand, it must not be forgotten that gas from under the seabed surrounding our own coastline should be our first line of defence.’

He called on the government to work with the industry to ‘rebalance the tax regime to ensure we make full use of our own resources’. OE

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