Providing for the UK’s Energy Needs

Oil and Gas Security of Supply

Security of energy supply is an important aspect of UK energy policy and was one of the four goals set out in the last Energy White Paper “Our Energy Future – Creating a Low Carbon Economy” (February 2003). Indigenous production from the UKCS will continue to make an important contribution to overall security of energy supply, if anything becoming more important as our reliance on imported oil and gas increases over the next decade.

The UK has been self-sufficient in oil for more than two decades and is expected to remain so until around 2009/2010. Oil demand has been flat in the UK since the late-seventies despite the growth in the economy.

Based on current investment plans, forecasts show UKCS production will begin to decline rapidly after 2010. During 2004, UKOOA commissioned work with Wood Mackenzie to examine the future capability of the UKCS. The study, described separately in this report, addressed the “Window of Opportunity” for the UKCS. It showed that there are still substantial opportunities to be accessed if the UK remains internationally competitive and can sustain current investment. If successful the UK could still be producing 65% of its total oil requirements in 2020 and delay decommissioning by 10-15 years, making a major contribution to the UK’s security of energy supply. If the UK becomes less attractive to new investment, then the UKCS will only provide 15% of total UK oil demand by 2020, providing a stark contrast.

Figure 13: UK Oil Production vs. Consumption 1970 - 2020

In 2004, the UK became a net gas importer again after a decade of self-sufficiency. Unlike oil, gas demand is projected to continue to rise over the next decade, based on growth projections by NGT. There will be a continued increase in the use of gas for power generation accelerating the import of new gas supplies. Figure 14 shows UK gas consumption against production. The Wood Mackenzie study shows that there are still substantial opportunities to develop new gas production if the current rate of investment can be sustained. If successful, the UK could still be producing around 25% of its gas needs from the UKCS in 2020. Whereas, if we deter investment, the UK will be producing less than 10% of gas requirements by 2020.

Figure 14: UK Gas Production vs. Consumption 1970 – 2020