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"Peak" Oil?
New Crude Found in UK Waters

“Peak oil” decriers must be used to feeling foolish at this point, but their folly continues (and will continue) to be exposed by discoveries of new oil supplies. The latest example comes to us courtesy of the North Sea waters off the shore of the UK’s Shetland islands, where the oil exploration firm Hurricane Energy claims to have found the country’s biggest new offshore reserve of extractable oil in more than a dozen years. The FT reports:

The latest find adds to a series of successful wells drilled by Hurricane in a geological formation that analysts say looks likely to be the biggest new oil discovery beneath UK waters this century. […]

Hurricane is expected to announce that initial data from its Halifax well indicates the presence of a 1km-deep oil column and that, crucially, it appears to be part of “a single large hydrocarbon accumulation” connected to the company’s adjacent Lancaster field. […]

Before drilling began in January, Ashley Kelty, analyst at Cenkos Securities, described Halifax as arguably the most important well drilled in UK waters this century. He predicted that, if a link with Lancaster was found, the area could hold over 1bn barrels of oil.

Many more wells will need to be drilled before we can get a reliably accurate estimate of how much oil Hurricane has discovered, but this is a very good start and comes as something of a lifeline for Britain’s offshore oil industry. North Sea oil supplies made the UK a net exporter of crude in the 1980s, but since then the region’s output has fallen considerably as fields have matured and new discoveries have failed to make up that difference. The collapse in crude prices over the past two years was especially hard on the industry, whose operating costs are among the highest in the world.

In the face of all of this, the UK has been using every tool in its possession to cajole investors to continue to scour its waters for reserves like the one Hurricane just found. And while the road ahead doesn’t exactly look promising, there is at least one reason for Brits to be hopeful: North Sea operating costs have fallen 45 percent in recent years. If that trend continues and exploration keeps yielding valuable new discoveries like this latest one, there might yet be life for Britain’s offshore oil and gas industry.

There’s another wrinkle to this story, though. Scottish voters chose not to become independent from the UK in 2014 in part because of concern over how the country’s economy would do on its own. A North Sea oil and gas industry in decline affected that calculus, but an uptick in activity there could make the idea of independence more attractive to Scots. In other words, few people will be more excited about this news than Nicola Sturgeon.

[This post has been updated.]

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  • Proverbs1618

    The “world is about to end” crowd needs to be reminded from time to time that they are going to end well before the world does.

    • ——————————

      humanity isn’t even an itch worth scratching as far as this planet is concerned…

  • Andrew Allison

    There’s no doubt that the utterly cynical Sturgeon will make hay with this announcement. Meanwhile, in the real world, Theresa May decides if and when there will be a new referendum (not going to happen until after Brexit, it’s expensive to drill offshore, there’s little prospect of oil prices increasing, the EU will require Scotland to apply for membership like any other supplicant, and if Scotland votes for independence it will deserve what it gets.

    • f1b0nacc1

      Since I am perhaps even more cynical than Sturgeon (if such a thing is possible), I cannot help but wonder if the announcement might be driven by the newly intensified interest in independence…

  • Josephbleau

    It will be a wonder if this play turns old Aberdeen positive again after the last 5 years. Maybe 1 Bn Bbl? meh.

  • Jack Hagan

    There is no such thing as “fossil” fuel. Saturn’s moon Titan has huge lakes of petroleum. Does that mean that Titan’s dinosaurs had space suits? Obviously not. Petroleum is a product of planetary geology. This simple fact is very upsetting to totalitarians everywhere.

    • Del_Varner

      A while back, maybe a month or two, some article announced that there was a big “lake” of molten carbon under the earth (see: I suggest that this kind of deposit is the source of oil on earth. As it rises through the crust it combines with hydrogen to form oil.

    • f1b0nacc1

      Hoyle made this point years ago, but it may be more a matter of there being multiple routes to forming petroleum….

      Which in this case is a distinction without a difference I suppose

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