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Low oil price could force 140 North Sea oil fields to close
[LONDON] Low oil prices could force the closure of around 140 oil fields in Britain's North Sea in the coming five years, a report released Wednesday by consultants Wood Mackenzie.
Wood Mackenzie forecast that number of fields would become economically unviable even if the price of Brent crude extracted from the North Sea returns to around $85 per barrel from the current level of around US$50.
"A high oil price (in 2011-2014) has enabled operators to extend field life and delay decommissioning time ... however the current low oil price has brought into stark relief that this cannot continue indefinitely," Wood Mackenzie wrote.
The fall in crude prices by around 60 per cent since June 2014 has in particular weighed on the ageing oil fields and platforms in the North Sea.
"The fields most likely to be decommissioned are uneconomic without high oil prices to justify escalating maintenance costs and declining production which are unable to support the high operating costs," said Fiona Legate, Wood Mackenzie's analyst for UK upstream research.
Low oil prices could also force the postponement or even cancellation of the 38 new North Sea fields expected to open in the coming five years, the consultancy warned.
The extreme depth of the North Sea deposits makes them costly to recover.