One third of North Sea oil and gas expected to remain in the ground

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More than a third of oil under British waters could remain in the ground if oil prices remain depressed, says report reveals extent of crisis in North Sea industry .

A study co-authored by Alex Kemp of the University of Aberdeen, a respected petroleum economist, warned on Wednesday that 36% of all estimated available hydrocarbons in the North Sea would likely remain underdeveloped by 2050 at prices $ 35 of oil. barrel.

Crude Brent is currently trading at this level after falling below $ 25 a barrel last month for the first time in 17 years.

The drop in oil prices this year, caused by a drop in demand during the coronavirus pandemic, plunged the North Sea into a new crisis which raised new questions about the long-term future of the old basin. a half-century.

Neptune Energy, the private equity firm chaired by former Centrica chief executive Sam Laidlaw, backed a $ 250 million deal concluded last year at a time when oil and gas prices were low on Tuesday. higher, to buy British and Norwegian North Sea assets owned by the Italian utility Edison.

The production of several mature North Sea deposits has already been abandoned because operators are slowing spending, while projects that were to be developed this year have been postponed. Companies active in the region expect the current crisis to cause 30,000 job losses.

Professor Kemp said 8.3 billion barrels of oil could be produced economically at prices of $ 35 a barrel, increasing with inflation, by 2050, but that would leave about 4.6 billion barrels likely to be left in the ground.

“This means that there are a very large number of undeveloped fields because they do not cross the obstacle at this price,” said Professor Kemp, adding that the North Sea was entering a “long decline term “.

Even at prices of $ 45 a barrel, 28% of all available hydrocarbons do not cross the economic obstacle, according to the study, which also warns that older fields are likely to be decommissioned earlier because it becomes less attractive to recover the remaining barrels.

Neptune Energy did not comment on Tuesday as to why it had abandoned the Edison assets deal, which included a 25% stake in Glengorm, a major gas discovery in the center of the British North Sea. But people familiar with the matter have pointed to falling oil prices.

Neptune was to acquire the assets of Energean, the energy company FTSE 250, which agreed in July to acquire all of Edison’s exploration and production activities. Neptune will pay $ 5 million in breakage costs to Energean.

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