The Economics of Gas and Energy in the UK

The Economics of Gas and Energy in the UK

Energy Investing 2017

  • In 2017, capital investment in the UK offshore oil and gas industry was 14.8 billion
  • The industry spent 9.6 billion operating its assets
  • The industry paid 4.7 billion in production taxes in 2016/17
  • The UK-wide supply chain is worth 35 billion, including 15 billion in the export of oilfield goods and services
  • The sector supports some 450,000 jobs
  • The industry operates some 475 offshore installations, 10,000 kilometres of pipelines and 15 onshore terminals

UK Energy Policy

  • Oil and gas provides more than 70 per cent of the UKs total primary energy
  • In 2030, 70 per cent of the UKs total primary energy is still expected to come from oil and gas, according to the Department of Energy and Climate Change (DECC)
  • UK production peaked in 1999 but steadied at 1.42 million barrels of oil and gas in 2014, the best year-on-year performance in 15 years
  • It is estimated that there could be up to 23 billion barrels of oil and gas still to recover from the UKs offshore areas

Carbon Reduction Pland fof the UK

  • Electricity generation, transport and heating each account for roughly one third of the UKs primary energy demand, with oil for transport and gas for heating dominating these markets
  • Natural gas is the cleanest of all fossil fuels, burning nearly twice as efficiently as coal and producing much less CO2 per unit of energy generated
  • The Energy Information Agency calculates that natural gas produces 117 lbs of CO2 per million British thermal units (Btu); petrol produces 157 lbs of CO2 per m Btu; and coal between 206 lbs and 229 lbs
  • Consuming oil and gas is therefore not necessarily incompatible with carbon reduction targets
  • Switching from coal to generate more electricity from gas would achieve significant reductions in CO2 emissions without compromising energy security of supply
  • UK offshore gas production rose by just over 1 per cent to 34.7 bcm in 2014.