North Sea Oil Becomes Net Drain for UK Economy
North Sea oil and gas drained £396 million from the UK economy last year after accounting for tax payments, the first time the industry has ever represented a net loss for the national treasury.
The sector has produced £190 billion in net revenues since the 1960s, £330 billion in inflation-adjusted figures, and accounted for £10 billion as recently as 2011. But as the industry’s older facilities come to the end of their operating life amid a global oil price crash, analysis by Carbon Brief shows that decommissioning costs for oil rigs and other infrastructure could offset all future tax revenue from the North Sea.
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The new numbers could put a damper on recent moves for a second referendum on Scottish independence. “North Sea oil has long been a central pillar of the [Scottish National Party’s] economic vision for an independent Scotland,” The Scotsman reports. “But the amount of North Sea oil still to be extracted is less than half of the figure the Yes campaign predicted ahead of 2014 independence referendum, an industry expert said in March.”
Carbon Brief reports that BP, ExxonMobil, and Shell each received hundreds of millions of pounds in public funds to cover decommissioning costs in 2014 and 2015, and the top five recipients of government largesse netted more than £1.1 billion over the two years. The UK Oil and Gas Authority (OGA) estimates shutdown costs for aging pipelines and oilfields will total £47 billion through 2050, with a range of plus or minus 40%, and a 2016 study put the total at £75 billion.