Opec deal ‘could provide boost to East Anglia’s energy industry’
- Credit: Copyright: Archant 2016
An international deal to reduce oil production could make the Southern North Sea (SNS) off the coast of East Anglia 'a much more attractive playground' if it leads to a rise in fuel prices, says an industry leader.
An increase in wholesale gas prices could benefit the basin around Norfolk and Suffolk by encouraging investment and incentivising companies to explore new gas fields, as well as increasing export opportunities for the area's international players, said Simon Gray, chief executive of the East of England Energy Group (EEEGR).
The Organisation of Petroleum Exporting Countries (Opec) agreed on Wednesday to cut production by 1.2 million barrels a day to 32.5 million barrels a day, its first reduction since 2008. As a result the oil price rose by more than 8% and broke the $50 mark, raising hopes that the depressed gas price, which usually tracks oil, would follow suit.
Mr Gray said: 'If the price does rise, then suddenly the Southern North Sea becomes a more attractive playground once again.
'But we would need fairly substantial increases before we see that renaissance and rejuvenation. We have seen prices rocket in the past, and clearly that would make it much more attractive for operators in the Southern North Sea.'
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Mr Gray said higher prices could encourage operators to go after a deeper-lying layer of carboniferous gas off the coast, which at current prices is not economically viable to extract.
'We know it's there but not to what sort of scale or volume,' he said.
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'We have to understand how difficult or not it may be to get it out. With current prices there's no appetite to go for it but if the price goes up then there may be.'
The oil and gas industry has undergone huge changes in the past two years, with prices halving from more than $100 a barrel in June 2014, as Opec shelved production cuts to maintain market share against a resurgent US oil industry.
But Mr Gray stressed the need for oil and gas companies to become more efficient, regardless of prices, and seek collaboration with companies in East Anglia's burgeoning offshore renewables industry.
EEEGR has established a special interest group looking at SNS rejuvenation, which will meet on December 14.
'We would like to see oil and gas companies working with renewable companies, jointly working to drive costs down by sharing resources, or accommodation or transport where possible,' said Mr Gray.
'If gas prices go up, it could also make renewables look more attractive, as until now they have been considered more expensive,' he added.
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