Remaining North Sea oil '˜less than half' 2014 SNP prediction
The amount of North Sea oil still to be extracted is less than half of the figure the Yes campaign predicted ahead of 2014 independence referendum, an industry expert has said.
Professor Alex Kemp of Aberdeen University predicted 11 billion barrels of oil equivalent (boe) could be recovered from the UK continental shelf from 2017-2050, using a “lower for longer” price modelling system.
The Scottish Government’s white paper on independence, published in 2013, said 24 billion barrels were recoverable.
The report, published last week by Prof Kemp and Linda Stephen, said there was a future for the North Sea industry thanks to on-going efficiencies in production but that costs would need to be kept low.
“If productivity can be significantly enhanced the economic recovery from the province can be greatly increased and the supply chain can benefit from a greatly expanded market,” the report said.
“But if these productivity improvements are not achieved the prospect is for long term decline at a brisk pace.”
As the prospect of a second referendum grows, the oil and gas industry - and its value to the economy north of the border - is once again coming under close scrutiny.
Earlier this week of Nicola Sturgeon’s leading economic advisers questioned the economic case presented by the Yes campaign in 2014.
Former MSP Andrew Wilson, chairman of the SNP’s growth commission, said oil revenues had been “baked into the numbers” supporting the nationalist case, contradicting claims North Sea income would simply be a “bonus” to an independent Scotland.
Mr Wilson, who will deliver his report on the economy of an independent Scotland within weeks, suggested Yes campaigners were wrong to say “oil was a bonus and not the basis” of their case.
“But we did have oil baked into the numbers and it was indeed a basis,” he told the BBC. “So I can say with some certainty in terms of our own work that we’ll assume for the purposes of our projections that oil is producing zero revenues and therefore treat any revenues that we get from oil as a proper windfall to be used on inter-generational projects rather than spent on spending today.”
The Scottish Government’s white paper on independence estimated that oil revenues would be between £6.8 billion and £7.9 billion by 2016/17. Since then, the oil price has dropped from over $100 a barrel to less than $60, and rising costs of extraction mean North Sea oil cost the Treasury £24 million last year, compared to a £2.15 billion surplus in 2014/15.