BG Group unveiled its biggest gas discovery in the North Sea for five years yesterday, raising hopes that the rate at which the UK's dependence on gas imports is increasing could be slowed.
The find, with estimated recoverable reserves of between 100 million and 275 million barrels, is the biggest since the Buzzard field was discovered in 2001 and comes amid declining production in the British sector of the North Sea.
BG owns a 30.5 per cent stake in the new find, its fifth in the North Sea in the past 12 months. The American energy group ConcoPhillips controls 36.5 per cent, with the remainder belonging to Italy's ENI.
An exploration well was sunk earlier this year 9km from BG's existing gas field, named Judy. A later well confirmed the discovery. Mark Carne, BG's executive vice president in Europe and Central Asia, said: "This is one of the largest recent North Sea discoveries and represents a highly attractive near-term, near infrastructure project. It once again reinforces the prospects for our UK exploration and production business and shows the continued productivity of the North Sea."
BG aims to begin production of natural gas from the new field in 2010. Development costs are being assessed, it said.
Industry experts confirmed the latest find was a significant one. BG shares advanced 7.5p to 694p. One analyst said: "There is an outside chance that this will represent a very substantial part of BG's UK reserves. People do not expect to make significant finds in the North Sea any longer. It does not change the view that it is in a mature state, but it does show there is plenty of life yet in the UK part. There is still exploration work to be done."
At the end of last year, the company's stated reserves were almost 2.2 billion barrels. However, only 347 million of those were UK reserves.
Britain became a net importer of natural gas - buying in more than it sold overseas - in 2004. That was two years earlier than had been expected, after production in the North Sea declined faster than had been forecast.
Major oil and gas producers, notably BP, have scaled down their activities in the region, although smaller North American companies have moved in.
Britons consume about 1.8 million barrels of oil and 1.6 million barrels of gas every day. BG is estimated to have supplied more than 90 per cent of the country's gas need last year from its own fields.
The company has interests in more than 20 fields in the UK continental shelf of the North Sea. It operates the Armada, Maria and Seymour fields in the central North Sea, the Blake and Atlantic fields in Outer Moray Firth, and the Neptune, Mercury, Minerva and Apollo fields around the southern North Sea.
Declining domestic production has sent gas prices soaring. They are about 260 per cent higher than in 2002. Oil and gas production from the North Sea is dwindling by 15 per cent a year.
Smaller, independent companies are snapping up the unwanted assets discarded by the bigger players. By the end of 2005, 143 companies operatedin the sector.Energy companies spent $855m (£449m) last year trying to discover oil and gas in the region to exploit higher prices. However, the 1.2 billion barrels of oil and gas pumped from the sector in 2005 easily surpassed that 732m barrels found and confirmed as fresh reserves.
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