Oil industry veteran Sir Ian Wood has said it is completely wrong to think that the North Sea oil industry is finished and guaranteed that it will return to strong activity within the next five years.
Sir Ian, who is former chief executive of the Wood Group and has advised the UK Government on maximising oil recovery, said nearly a third of the North Sea’s oil has still to be extracted. He acknowledged the current downturn “is probably as tough as it gets”, after Oil and Gas UK (OGUK) warned yesterday that the industry stands “at the edge of a chasm”. He said it is “a very serious time” with oil prices around $30 a barrel, 43 per cent of fields operating below cost level and no sign of any investment or exploration.
Sir Ian echoed OGUK’s call for urgent tax reform, insisting Chancellor George Osborne must adjust taxes to reflect the maturity of the North Sea.
But he predicted a return to $55-60 oil, and called on the Oil and Gas Authority to work to prevent another “boom and bust”.
“We produce about 44 billion barrels and there is a view that there could be another 20 billion to come, so it’s almost a third still to come,” he told BBC Radio Scotland. “I think that’s a bit high, but it could be 15 to 16 billion barrels to come, so there’s a huge prize out there and it’s quite wrong to think that the North Sea is finished. That is just completely wrong. The North Sea will recover.”