Oil will last for rest of century - Fergus Ewing

Mr Ewing suggested that if the right policies were pursued Scotland’s offshore oil industry, which is key to the SNP’s independence plans, would still be productive up to the year 2100. The bold prediction was made when he led a delegation of Scottish companies last week to the Offshore Technology Conference, the world’s leading oil and gas show in Houston, Texas. But Mr Ewing’s optimistic vision of the oil and gas reserves was yesterday described as “highly speculative” by one of Scotland’s leading independent oil experts, and was also contested by his political opponents. In an interview with industry publication Rigzone, Mr Ewing used new oil discoveries in the Clair field, west of Shetland on the Atlantic frontier, to back up his “personal view” that production would continue for at least another nine decades. “In domestic terms, the [Scottish] industry is having a second major opportunity with a huge number of major new developments going ahead, some of which are extensions of existing developments,” he said. “For example, the Clair Ridge field has the potential to produce oil until 2055, according to BP. “The Clair field was actually discovered in 1977, and that’s ironic because we were told by London the oil would run out in the Nineties, and then in the Nineties that it was going to run out in the Noughties. “I think it’s a theme that’s losing credibility, because if BP comes along and says the Clair Ridge field will continue to produce until 2055, it’s a bit liberal to say the oil is going to run out, because it ain’t.” Mr Ewing said he believed there were “huge opportunities” domestically for the Scottish oil and gas sector that would keep oil and gas production going. He said: “My personal view is that oil and gas production [offshore Scotland] will continue for the rest of the century, provided we make the right policy decisions.” His optimism comes despite a leaked Cabinet paper published earlier this year which revealed that finance secretary John Swinney had acknowledged oil revenue was in decline and the volatility of oil prices meant there was “considerable uncertainty” over how much cash would be generated by the industry. Oil and Gas UK’s latest surveys say that oil and gas fields will be producing beyond the 2040s. Oil and Gas UK also say that if investment is sustained around half of Britain’s oil and gas demand could still be met by domestic production in 2020.” But Alex Kemp, professor of petroleum economics at Aberdeen University, said: “In our last research paper – what we thought was that there could be production in 2050, but that would be really quite, quite small.” Prof Kemp’s research produced economic models for oil and gas production up to 2050 based on a $90 per barrel oil price increasing with inflation. By 2050, Prof Kemp estimated there would be 125,000 barrels of oil-equivalent produced per day. That compares with the 1.55 million barrels of oil-equivalent per day coming out of the North Sea last year. “We didn’t model further, but it will be so small in 2050 that you wonder if the infrastructure would be economic,” said Prof Kemp, a former member of Alex Salmond’s Council of Economic Advisers. “In our detailed modelling we have shown there could be small limited production in 2050, beyond that it is highly speculative.” Mr Ewing’s prediction was also questioned by political opponents, who claimed the minister’s comments were “misguided and irresponsible”. Rhoda Grant, Scottish Labour energy spokeswoman, said: “Has Fergus Ewing been conjuring up images of the future on a crystal ball? That’s the only explanation I can think of for him to make such a statement, against the vast amount of credible research to the contrary and even statements from his own colleagues. “John Swinney himself, along with Nobel economist Joseph Stiglitz, has admitted basing Scotland’s economy on oil is foolish. Mr Ewing’s comments are worse than foolish, they are misguided and irresponsible.” She added: “Fergus Ewing says the industry needs stability, while his government are creating instability with their independence referendum. “For instance, they tell us that they will create an oil fund the like of Norway’s, but cannot tell us how they are going to fund this – whether this will be top-sliced from taxation, meaning less revenue for public services, or whether it will be an additional tax to oil and gas producers.” Scottish Conservative MSP Murdo Fraser, convener of Holyrood’s energy committee, said: “After the Nato, EU and currency fiascos, you would have thought the SNP would stop making things up. But such is their desperation to enhance their never-never land vision of an independent Scotland, it seems they just can’t help themselves. “Next they will be telling us that under independence every day will be the first day of spring. With best industry estimates going no further than 2050, there is simply no basis to claim the economic extraction of North Sea oil will last another 50 years after that. “Fergus Ewing must reckon the people of Scotland came up the Clyde on a water biscuit if they think they will swallow such wild assertions without question. “The SNP needs to get a grip of itself and start telling people the unvarnished truth about what life in an independent Scotland will be like.” But a Scottish Government spokeswoman said last night: “There is plenty of life left off Scotland’s shores.” She said the BP Clair Ridge development would be in production until at least 2055, and added: “Scotland’s Oil and Gas Strategy, announced last year and developed in conjunction with industry, has a key focus on the need to develop innovation support to increase oil and gas technology capabilities, to ensure that we capitalise effectively on the future potential that exists in the North Sea for many years to come. “Our technological and innovative approach is key to maximising recovery of our oil and gas for many years to come, and it has been estimated 1 per cent more oil and gas recovered in the lifetime of fields would yield £22 billion.”