Oil and Gas
Offshore activity has been a mainstay of the East of England economy for the past forty years and has provided a vital lifeline in recent recessions, particularly for areas around the east coast of the region. Over the next 10-15 years, the UK will be increasingly reliant on oil and gas to meet its primary energy needs. The DTI projects that the UK's oil and gas needs will rise from 74 percent of primary energy to 85 percent in 2020. At the same time the demand for gas for power generation will grow by 60 percent over the same period.
During 2004/05, the price of oil and gas saw some volatile changes due to varying external factors. By maximising recovery of the UK Continental Shelf's indigenous reserves the impact of the energy price volatility can be cushioned and bring many direct benefits to the UK economy e.g. employment, tax revenues, investment and balance of trade.
The UK North Sea region has seen many new entrants enter the market helped during the 22nd and 23rd offshore licensing rounds with the DTI offering new style licence consents to stimulate exploration and continued production. The new entrants are investing hard to slow the rate of production decline with £9bn being invested in 2004.
It is estimated that if investment is sustained at such levels, the UKCS could still be producing 65 percent of the UK's total oil requirements and at least a quarter of our gas requirements in 2020.
With the changing landscape of the energy industry, the traditional major oil and gas operators do not have the presence in the East of England they had three years ago. Newer entrants are emerging and EEEGR is already developing new relationships with these. New business models are evolving and this will have an effect on how the supply chain will operate. It is important that existing relationships with the now non-regional majors are maintained and enhanced for regional benefit by meeting their need to internationalise their supply chains. The energy industry can be somewhat volatile and particularly so in the offshore oil and gas industry in the Southern North Sea (SNS). This provides a potential opportunity with the higher prices of oil and gas introducing a new wave of optimism into the sector with a significant number of new companies arriving in the Southern Basin which offers increased opportunities for the supply chain in the East of England. EEEGR must continue to have a degree of flexibility to react to, and benefit from the changing environment.
*Taken from the EEEGR Business Plan 2007-2010
