The New York Times: Bright Future Not Certain for British Oil and Gas Production

The vote to keep Scotland in the United Kingdom removed a cloud of uncertainty for the British energy industry. But the long-term challenges still loom.

Though Britain remains the largest oil producer in the European Union, a prosperous future is far from assured. Companies have scaled back exploration drilling in the North Sea in recent years and found little new oil and natural gas. Wood Mackenzie, the Edinburgh-based industry research firm, warned in a recent report that oil and gas production could fall below one million barrels per day by 2023, less than a quarter of the peak in the late 1990s.

Companies grouse that they are plagued by high operating expenses — which rose about 15 percent last year in their North Sea operations, because of rising maintenance requirements for aging equipment and higher costs of contractors — while achieving substandard returns on their oil and gas production.
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