Britain’s economy floating on oil

Press, 29 March 1980, Page 16

Britain’s economy floating on oil

The cynics say that Britain-is being kept afloat only by the liquid gold of North Sea oil. But with self-sufficiency predicted for late this summer, coupled with soaring oil prices, the value of the windfall to the country’s flagging economy is apparent to all.

The British Government has a huge stake in North Sea oil — as investor, operator, and taxman. Even at conservative estimates, revenue is now expected to reach §32 billion by 1985. Just what effect oil money ■will have on Britain’s economy depends on some important decisions to be made by Mrs Thatcher’s Government over the next few months. There are four key issues:

1. The future role of the British National Oil corporation, the organisation set up by Labour in 1976. '2. Taxation in the future. This will affect the willingness of companies to continue extraction from existing fields at increased cost, and explore new ones. 3. The price of crude oil. 4. The North Sea fields’ depletion rate, determining how long the oil will actually last. Oil is certainly one British industry that is booming. When it is considered that the first discovery in the United Kingdom sector — B.P.’s Forties field — was made only 10 years

ago, the pace of development has been rapid.

Britain now faces the enviable prospect of being an industrial country 7 producing more oil than she needs during a period of world energy shortage. This fact is not lost on her E.E.C. partners when Mrs Thatcher comes to argue hardship within the community. Even the most pessimistic forecasts do not see the country becoming, a net importer of oil again until at least the 19905. Some imports will continue, but only to provide a suitable mixture of various grades.

No-one knows for certainty how much of the precious black crude lies deep within the North Sea continental shelf. Estivary between 18 and 33 billion barrels. The amounts to come from future fields, depending on the economics of recoveryrelated to the then price, have to be guessed at. But measured against Britain’s annual oil consumption of 700 million barrels. the potential exists for the North Sea to provide for the country's needs for at least 25 years, and possibly for 45 to 50 years. (A barrel is 35 gallons.) The spiralling price of oil has made smaller fields, which would once have been ignored, economic propositions. And there have been advances in technology needed to

extract oil in the galeforce winds, driving rain or snow, freezing temperatures, and deep water of the North-Sea. •8.P., for example, has developed a tanker-plat-form-suitable for working small fields. It is simply a tanker with a small-scale

version of the facilities of an oil platform. Oil, even that discovered during exploration, would be pumped direct into the tanker’s hold. Another development is the “tension leg” platform which is tethered, rather than built into the seabed.