LONDON (Alliance News) - UK Chancellor of the Exchequer George Osborne Wednesday moved to encourage firms to seek out remaining North Sea oil and gas reserves, pledging financial support for drilling in more expensive and more difficult ways.
In his annual budget, Osborne announced a new allowance for ultra high pressure, high temperature oil and gas projects.
High pressure, high temperature wells have potential pressure of greater than 15,000 pounds per square inch with a potential flowing temperature of greater than 177 degrees Celsius at the wellhead. The sites are technically more difficult to develop but can reach reservoirs that are deeper and further away than ever before.
The budget statement said that the process should support the development of these major projects in the UK North Sea particularly, leading to further jobs, providing a significant portion of UK gas demand and generating billions in capital investment.
The budget statement also announced a review of the UK's tax treatment of the North Sea to ensure that it continues to incentivise economic recovery as the basin matures. The Treasury said that tax incentives for UK oil and gas projects in 2013 led to a further GBP7 billion in investment during the year.
The UK government has been heavily pushing oil and gas investment in recent years as it attempts to begin to reduce high energy prices. In January, UK Prime Minister David Cameron said that English authorities will receive 100% of the business rates collected from shale gas schemes, instead of the usual 50%, while in 2013 the government said that local communities could receive GBP100,000 when a test well is fracked in their region.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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