Britain's offshore oil and gas fields could still be delivering 1.5m barrels a day by 2020, enough to satisfy 35% of UK energy demand, according to industry trade body Oil & Gas UK – but only if high fuel prices and tax breaks combine to make viable a growing backlog of exploration and development projects in the North Sea. Without renewed investment, production from already mature fields, currently meeting about two-thirds of Britain's energy needs, will drop to 0.5m barrels a day by the end of the decade, representing only 11% of energy demand.
Earlier this month Ofgem published its strongest warning to date that Britain was heading for an energy crisis. "For the next two to three years with gas supplies and power station availability, we are in a plentiful position," Ofgem chief executive Alistair Buchanan said. "The problem is the speed at which it deteriorates. To wait a few more years [without doing anything] could cause us trouble. We would get down to historically low levels of margins of plant, to when you are starting to ask if you have enough power stations." Having surveyed 70 companies, Oil & Gas UK believes falling investment during the past four years has been a major factor driving down oil and gas production levels. Last year production fell 6% to 2.48m barrels.