Gas Continues to Play an Important Role in UK

Responding to indications that the Government is preparing to put in place support for the development of more of the UK’s natural gas and its use in power generation, Oil & Gas UK’s economics director, Mike Tholen has made an announcement.

He said: “The Government’s confirmation that gas will continue to play a fundamentally important role in the UK’s energy mix should give investors much-needed certainty to invest. We have long believed that when balancing the competing demands of lower emissions, security of supply, cost to consumers and economic competitiveness, gas has a greater role to play, especially in electricity generation, in the UK’s future energy mix than policies had previously allowed for. Natural gas can be relied on to keep the lights on.

“While increasing gas fired power generation capacity is very important, electricity is not the only form in which Britain uses gas; indeed, 80 per cent of homes are heated using the fuel so maximising production of all of the UK’s gas, offshore as well as onshore, is paramount. With a tax rate on offshore gas production of between 62 and 81 per cent and a price that is typically around half that of oil, attracting investment in gas projects on the UK continental shelf is needlessly difficult. Therefore, Oil & Gas UK believes that a consultation on how best to promote the development of onshore gas via the tax regime should sensibly encompass offshore gas reserves too.

“While joined up working between Government departments is crucial in maximising recovery of both the UK’s oil and gas reserves, we do not believe that proposals to establish a separate regulatory body for the development of onshore gas is the way to achieve that. We would strongly support the expansion of DECC into one well-resourced, technically expert organisation to regulate the licensing and development of all of Britain’s energy reserves, whether offshore or onshore, whether renewable or hydrocarbon.”

[mappress]

December 5, 2012