Third of North Sea oil and gas likely to be left in ground

Edinburgh | More than a third of the hydrocarbons beneath UK waters could remain in the ground if oil prices remain at depressed levels, according to a report that lays bare the extent of the crisis hitting the North Sea industry.

A study co-authored by Alex Kemp of the University of Aberdeen, a respected petroleum economist, on Wednesday warned that 36 per cent of all estimated available hydrocarbons in the North Sea were likely to remain undeveloped between now and 2050 at oil prices of $US35 ($53) a barrel.

Brent crude is currently trading at about that level after last month dropping below $US25 a barrel for the first time in 17 years.

The plunge in oil prices this year, caused by a slump in demand during the coronavirus pandemic, has thrust the North Sea into a fresh crisis that has raised further questions over the long-term future of the half-a-century-old basin.

Neptune Energy, the private equity-backed company chaired by former Centrica chief executive Sam Laidlaw, on Tuesday backed out of a $US250 million ($382 million) deal struck last year, at a time of higher oil and gas prices, to buy UK and Norwegian North Sea assets owned by the Italian utility Edison.

Production at several mature North Sea fields has already been abandoned as operators rein in expenditure, while projects that were expected to be developed this year have been postponed. Companies active in the region are expecting the current crisis to lead to 30,000 job losses.