As much as £330 billion ($426 billion) could be spent on oil and gas extraction in the North Sea by 2050, according to research published Wednesday.
The report by Aberdeen University also upped forecasts for energy production in the region off Scotland’s coast, estimating that up to 17 billion barrels of oil equivalent could be extracted between 2018 and 2050.
The study applied financial simulations to create a model for the oil industry over the next three decades, assuming different market prices to justify different levels of extraction.
At $70 per barrel and 60 pence per therm, oil and gas recovery was projected to exceed 17 billion barrels of oil equivalent by 2050. However, researchers noted that cost inflation was a greater danger at this price and could “endanger the economic viability of some projects.”
The researchers said at $70 per barrel, almost £330 billion ($426 billion) would be spent on extracting oil from offshore fields.
At $60 a barrel, those extraction and operating costs lessened to £272 billion, generating cumulative production to 2050 of 14.8 billion barrels.
By 2014, an estimated 40 billion barrels of oil had been extracted from the North Sea.
Tax hike speculation
Ahead of U.K. Finance Minister Philip Hammond’s budget announcement on Monday, there has been speculation that the industry may see a hike on taxes.
Alan Brown, energy spokesperson for the Scottish National Party, said the party wanted a more stable fiscal regime for the oil and gas industry.
“These latest revisions to forecasts confirm the major economic potential that North Sea oil reserves has to offer, with an expected 4 billion barrels more than 2017 estimates,” he said.
“It’s more important than ever that the Tories at Westminster rule out any hikes in tax for the oil and gas sector and instead support the future of the industry with new incentives for exploration to provide a long-term boost to both production and revenues.”
Oil is currently trading above $70 a barrel, with investment banks and hedge funds saying as recently as this month that prices had rallied too far too fast. On Monday, Helima Croft, global head of commodity strategy at RBC Capital Markets, “Worldwide Exchange” that unlikely contenders Nigeria and Libya could influence whether oil reached $100 a barrel.
