Scottish government sees production of oil and natural gas increasing in North Sea basins. File photo by A.J. Sisco/UPI |
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EDINBURGH, Scotland, June 25 (UPI) -- Though the industry is in a downturn, the Scottish government said Thursday it expected production from the North Sea to increase by more than 10 percent.
Data published by the Scottish government said the North Sea remains the largest oil producer and second largest natural gas producer in Europe. Scottish Deputy First Minister John Swinney said there's "no disputing" the industry is depressed, but production is expected to increase by as much as 17 percent by 2019.
"These figures show that considerable opportunities to extend production remain in the UKCS and that, properly supported, the industry can boost production over the next five years," Swinney said.
A January report from analysis firm Wood Mackenzie said exploration activity in 2014 was off 18 percent from the previous year. Operating expenses in the North Sea are up 8 percent while revenues for oil companies working in the region are at their lowest levels since 1998. Combined, those elements translate to a negative cash flow for North Sea operators.
In June, the Aberdeen & Grampian Chamber of Commerce, in partnership with law firm Bond Dickinson, said 67 percent of the companies working in the North Sea have been forced to shelve projects and half have been forced to cut staff in the depressed crude oil market.
A May budget plan outlined in London was aimed at boosting exploration for new oil and gas reserves in the North Sea. Ian Wood, who led the drive to add vitality to the sector, said the new package should help stimulate investor confidence in a North Sea oil and gas industry coping with the decline of older fields.
Scotland pegged its future during a bid for independence on revenue from oil and gas reserves in the North Sea. The bid failed last year, though the government in January said the region's energy sector needs a predictable set of governing policies in order to thrive.
An independent Scotland would've drawn on revenue from the oil and gas sector to fuel the economy while generating electricity from renewable resources. Scottish officials said that, with more than half of the onshore wind sector focused in its territory, the British government was on the wrong side of the low-carbon debate.
