Oil prediction welcomed by both sides in Scottish referendum

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The Yes and No campaigns in the Scottish independence referendum have welcomed new academic projections about the future of North Sea oil and gas.

The SNP said Professor Alex Kemp, director of Aberdeen Centre for Research in Energy Economics and Finance, has demonstrated that “Scotland’s oil and gas industry will make a significant contribution well beyond 2050”.

But Better Together said the academic “has today exposed the exaggeration, wishful thinking and spin at the heart of the SNP’s forecasts”.

Writing in the Press & Journal newspaper, Prof Kemp said future tax relief “could incentivise further field developments resulting in a total plausible range of 15-16.5 billion boe (barrels of oil equivalent) over the period to 2050”.

“The year 2050 is a convenient date at which to stop detailed modelling, but the industry will continue beyond that date,” he added.

He urged politicians to aim towards recovering the oil and gas industry’s own estimate of 24 billion boe.

“It is quite conceivable that the industry can be prolonged well beyond 2050 at activity levels which, while small by today’s standards, contribute significantly to the national economy,” he said.

“No-one can say with any assurance whether or not the long-run upper potential of 24 billion boe foreseen by Oil & Gas UK will be achieved, but policies consistent with this should be put in place.”

Scottish Energy Minister Fergus Ewing said: “I warmly welcome his prediction that Scotland’s oil and gas industry will make a significant contribution well beyond 2050.

“It’s also particularly interesting to note his views on the impact of technological advances on Scotland’s oil and gas sector, his prediction than oil recovery rates will improve and that more fields may be reopened as technology improves further, especially as he highlights the Miller field where there is the reported potential of around a further 40 million barrels.”

Labour’s shadow energy minister Tom Greatrex said: “Prof Alex Kemp has today exposed the exaggeration, wishful thinking and spin at the heart of the SNP’s forecasts on Scotland’s recoverable oil and gas reserves.

“His conclusions reinforce the assessment from Sir Ian Wood that the likelihood is that Scotland will produce ‘15-16.5 billion boe over the period to 2050’ - almost a third less than the 24 billion barrels that the SNP routinely claim as available.

“Alex Kemp’s assessment also makes clear that higher extraction will only be economic with a high oil price, although even then he warns that some fields face ‘extremely high costs per barrel and may never be commercially viable’.”

Mr Ewing also welcomed the endorsement of a Yes vote by energy expert Dick Winchester, who has decades of experience in the energy industry and sits on the Scottish Energy Advisory Board.

Mr Ewing said: “Dick Winchester is right to highlight the gross mismanagement of Scotland’s energy resources by successive UK governments.

“For too long the revenues from Scotland’s energy wealth have been squandered by the Treasury and the unstable tax regime imposed by Westminster has held the industry back.”

Mr Ewing is scheduled to debate his competing vision for the future of Scotland’s oil and gas industry with Better Together leader Alistair Darling at Oil & Gas UK business breakfast in Aberdeen on Wednesday.

Meanwhile, Scottish Secretary Alistair Carmichael visited marine survival firm Survitec today to learn more about the company’s new emergency breathing equipment for offshore helicopter passengers.

He said: “Our oil and gas industry supports hundreds of thousands of jobs in Aberdeen and across the country. But we all know that exploration is not without risk.

“Regulation and effective safety equipment is crucial to the long-term future of the industry and protecting the men and women who work in the sector.

“Proper maintenance of this life-saving equipment is as important as drill bits and piping when it comes to getting oil and gas out of the ground safely.”