UK needs to maximise remaining oil reserves, MPs warn

London, June 30, IRNA – The British government needs to take steps to ensure that the UK's remaining oil and gas resources are exploited to the greatest benefit, a new all-party group of MPs warned Tuesday.

In its first full inquiry, the Energy & Climate Change Select Committee argued that to prioritise the security of UK energy supply whilst moving towards a low carbon economy, the government must do more to support the efficient recovery of UK’s rapidly depleting oil and gas reserves in the North Sea.
"We all know that in the face of climate change we need to develop a range of sustainable alternative energy supplies for the future. However, on the way to that goal we must take steps to ensure we can make the most of our own oil and gas reserves,” said committee chair Paddy Tipping.
Tipping warned that oil and gas companies operating on the UK continental shelf currently face a “quadruple whammy of high costs, low prices, lack of affordable credit and a global recession.”
“We have learned that a lack of affordable lending and bleak investment prospects could wipe out 50,000 jobs and lead to a significant fall in production,” he said in launching the new report.
"If the Government does not respond to this problem by giving better fiscal and regulatory signals then we may never recover anything like as much of our domestic reserve as would be desirable,” Tipping said.
Oil and gas production from the British sector of the North Sea have been in rapid decline since 2000 as reserves become exhausted and remaining supplies become more difficult and expensive to extract.
In its report, the committee concludes that the 'field allowance' and other measures in this year’s budget will not be enough to create the competitive environment or the commercial incentives required to provoke investment in both existing and in new fields sufficient to deliver the predicted extra 2 billion barrels of oil hoped for.
It urged ministers to review existing fiscal arrangements and set out the predicted effects of other options. Looking as far as outlying areas west of Shetland, it also called on the government to work with industry to agree a timescale for the establishment of the infrastructure required to exploit resources there.
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