Knowledge Centre
Economics, Energy Policy and Gas
Key facts
Economics
- Over the last four decades, a total of £468 billion (2010 money) has been invested in exploring for, developing and producing the UK's oil and gas reserves.
- In 2010, the sector was the largest industrial investor, spending £6 billion, while operating costs were £6.9 billion.
- Oil and gas production from the UKCS has contributed £293 billion (2010 money) in tax revenues over the last forty years.
- In 2010/11, the industry paid £8.8 billion in tax on production, which is 20% of total corporation taxes received by the Exchequer. This is expected to rise to over £13 billion in 2011-12, providing over one quarter of total corporation taxes.
- The wider supply chain is estimated to have contributed another £6 billion in corporate and payroll taxes.
- In 2010, the UK's balance of trade in goods and services was boosted by oil and gas production to the tune of £32 billion, almost halving the UK's deficit.
Energy Policy
- In 2010, the UK was the 15th largest gas producer (3rd in Europe) and 20th largest oil producer (2nd in Europe).
- Oil and gas production from the UK sector of the North Sea peaked in 1999, but the UK remains a substantial producer today.
- Over the last four decades, over 40 billion barrels of oil equivalent (boe) have been extracted on the UKCS. In 2010, the combined production of oil and gas was 810 million boe, or an average of 2.2 million boe per day.
- Three quarters of the UK’s current primary energy demand is met by oil and gas. In 2010, oil produced on the UKCS satisfied 87% of domestic demand while gas produced in the UK met 61% of demand.
- In 2020, it is estimated that 70% of primary energy consumed in the UK will still come from oil and gas, even upon achievement of the Government’s target to source 15% of energy from renewable sources.
- The UKCS has the potential to satisfy around 60% of the UK’s oil and gas demand in 2020, if investment is sustained.
Gas
- Electricity generation, transport and heating each account for roughly one third of the UK's energy demand.
- The proportion of electricity produced from gas has risen from 2% in the early 1990s to 47% in 2010.
- In order to meet electricity demand, the UK must replace approximately one third of its electricity generating capacity in the next 10-15 years.
- Oil & Gas UK believes the only generating technology which can realistically fill the electricity gap in sufficient quantity is gas and its benefits are many:
- proven technology and reliability
- lowest capital cost
- shortest construction time
- highest generating efficiency
- least difficulty in planning
- half the emissions of carbon dioxide per unit of electricity generated compared to an existing coal-fired power station.
