This paper examines the future prospects for oil and gas in the UKCS prospects for oil and gas in the UKCS with the use of a large financial simulation model. The model contains as inputs all the known information relating to (a) currently producing fields, (b) those under development, and (c) discovered but not developed prospects. The model operates by prospects. The model operates by triggering the development of a field when a given minimum rate of return is in prospect.

The main findings of the study are that oil and gas production will rebound to reach a new peak in the mid-1990s. Gas production from the Central North Sea production from the Central North Sea and the Southern Basin could be buoyant well into the next century, depending on whether recent discoveries are eventually developed. New development investment will be very high in 1991 and 1992 but fall off somewhat in the middle of the decade. A further upturn is forecast for the later years of the decade. North Sea oil and gas will continue to make a major contribution to the UK economy well into the next century.


The operating environment within which North Sea oil and gas exploitation is taking place is both uncertain and subject to continuous change. Some of the major influences, such as oil price movements, are exogenous, being determined essentially by factors out with the province. Others, such as the implementation of the recommendations of the Cullen Report on safety issues, have arisen from factors within the province. In an extractive industry with production subject both to natural and inevitable depletion, and to repletion through the development of new discoveries, there is an inherent dynamic whose overall consequences are not immediately obvious.

Currently production from the largest components of the first generation of fields (such as Forties, Brent and Ninian) has fallen substantially from plateau levels with a significant plateau levels with a significant consequential effect on the industry's cash flow. This is coming at a time when major investments in new fields and the associated infrastructure is taking place.

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