Fergus Ewing warns North Sea oil could be limited

Production in the southern fields could be halted by 2035 without government support, industry leaders fear. Picture: Complimentary
Production in the southern fields could be halted by 2035 without government support, industry leaders fear. Picture: Complimentary
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A MASSIVE chunk of the North Sea could be turned off to oil production within the next couple of decades pulling the plug on £85 billion of tax revenues, energy minister Fergus Ewing has warned.

• Energy Minister said that it was not possible to predict how long oil and gas production would last

• Fergus Ewing said on a US trip last week that oil and gas could last until the century’s end

• Industry leaders fear southern fields production could end by 2035 without greater Government support, according to Mr Ewing

Industry leaders fear that without greater Government support to help address the ageing condition of many rigs and encourage exploration, production in the southern fields could end by 2035, according to Mr Ewing.

The energy minister faced criticism from MSPs today over his claims on a trip to the US last week that oil and gas could last until the end of the century - despite experts insisting that forecasts have only been carried out until 2050.

But Mr Ewing told MSPs at Holyrood today: “We believe that oil and gas production should last for most of the rest of this century.”

The minister said it was not possible to predict this with “absolute certainty.”

Industry leaders have warned that southern North Sea oil and gas production may close in around 2035 because of the ageing infrastructure like the rigs and wells - without the “right polices” to address the challenges.

“The potential consequences would be fiscally catastrophic,” Mr Ewing said.

“The right policies include collaboration between companies, further exploration must be incentivised and further fiscal incentives to be considered.”

“Those are the right policies that the industry has identified - are they going to be taken or not?

“The consequences of failure were estimated by one industry source as a loss in tax revenue of £85 billion.

“That is what’s at stake.”

The outgoing head of energy regulator Ofgem recently warned that spare capacity margin in electricity supply in the UK was going to fall to about 4 per cent.

Mr Ewing said this was “next to nothing”

He added: “The product of energy policy in the UK over decades of lack of investment in the grid and a lack of consideration to ensuring a diverse and sufficient range of capacity is that now there’s a real risk that the lights go out south of the border.

“North of the border we haver a margin of 25 per cent which is much more as it should be.”

“From time to time some people in the SNP have felt that the Government of England was in the dark, but we don’t actually want the people of England to spent time in the dark. To avoid that they will need the increasing electricity supply which will be transmitted south of the border.”

He added that £7 billion of upgrades are now being undertaken to the national grid which will allow energy exports from Scotland to England to be quadrupled.