A Comparative Study of Licensing and Concession Systems
New Horizons in Environmental and Energy Law series
Edited by Tina Hunter
Chapter 4: Licensing the exploration for and production of petroleum on the UK continental shelf
Production of hydrocarbons began on the UK continental shelf (UKCS) in 1975 and since then some 41 billion barrels of oil equivalent have been produced. While it is widely accepted that the majority of recoverable oil and gas originally in situ has been extracted, even conservative estimates suggest that 12 billion barrels of oil equivalent remain and some put the figure higher. Whatever the total remaining to be produced, however, there can be no denying that the rate of production is now well past its peak. The peak year for oil production was 1999 with around 130 million tonnes extracted, and for gas 2000 when 108 billion cubic metres were produced. Production is now substantially lower, at around 40 million tonnes of oil and 37 billion cubic metres of gas per annum. Oil and gas reserves in the North Sea area of the UKCS are therefore becoming progressively depleted to the extent that it is now described as a mature basin. This refers to the probability that all the major discoveries have now been made, the infrastructure is ageing and the viability of smaller, more marginal discoveries may often depend on the ability to tie them back to that infrastructure before it is decommissioned. Meanwhile, the area of the UKCS west of Shetland, which was for many years regarded as a promising but technologically challenging frontier region, is becoming better established and some of the most exciting projects are under way there.
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