Alex Salmond’s oil predictions aren’t so slick after all

Has Alex Salmond wildly overestimated the part of oil in his independent utopia?

Has Alex Salmond wildly overestimated the part of oil in his independent utopia?

Further significant doubts have been cast over the economic basis of an independent Scotland.

Not as slick as originally felt.

The latest developments come during an interview given by Sir Ian Wood, who was responsible for transforming the fortunes of the Wood Group, an oil company. Sir Ian, originally from Aberdeen has also previously undertaken extensive work for the UK Government on offshore oil and gas recovery and its regulation.

Speaking exclusively to the industry publication, Energy Voice, Sir Ian has cast substantial doubts over the assumptions made in the Scottish Government’s white paper on independence about oil production.

According to the SNP administration, there remains enough North Sea oil reserves for 24 billion more barrels of the black gold. According to Sir Ian this remains a wildly optimistic scenario. He explained:

“Based on the research and conversations within my review, and across the industry, I believe, that even with a more sympathetic tax and regulation framework, the likely best outcome, without new hydrocarbon regions being discovered, is between 15billion and 16.5billion barrels.”

Such figures would make the SNP’s figure somewhere between 45% and 65% too high.

He continued in his interview to argue that what was more important was how long offshore oil and gas production would last. To this he explained:

“We now have a mature offshore oil and gas basin with depleting reserves, and even with everything possible being done to maximise recovery, we will be down to very low levels of production by 2050 – probably less than 250,000 barrels per day, about a sixth of our current level.

“So offshore oil and gas cannot figure significantly in Scotland’s medium term economic calculations.

“It means our young voters must be fully aware that by the time they are middle aged, Scotland will have little offshore oil and gas production and this will seriously hit our economy, jobs, and public services.

“What’s more, the rundown impact will begin to be felt by 2030, which is only 15 years from now.”

Pointing to the need for a debate on independence focussed on economic realism, Sir Ian continued:

“I believe the debate should not be about nationalism, but growth and economic success, and the quality of life for citizens and all that goes with that. Against these measures, it’s very hard not to conclude the case is heavily weighted towards Scotland remaining in the UK and getting the best of both worlds – I want the best for future generations of Scots.”

Responding to Sir Ian’s comments, Scotland’s Energy Minister Fergus Ewing argued that there is “a wealth of expert opinion on the huge scale of Scotland’s long-term oil and other energy reserves”.

He continued:

“This is ultimately a debate about exactly how big Scotland’s remaining oil reserves are, and most countries are not nearly lucky enough to be in that fortunate position.

“The estimate of up to 24bn barrels of oil remaining is the industry’s own projection – and Sir Ian’s own recent report also referenced the remaining reserves in the North Sea as being up to 24bn barrels, meaning there is potentially as much still to come in value terms as has already been extracted.”

The Better Together leader and former Chancellor, Alistair Darling however declared that Wood’s analysis “fatally undermines” the SNP’s oil predictions and “blow[s] apart Alex Salmond’s plans for funding schools and hospitals.” He added that it was “devastating for his [Alex Salmond’s] ridiculous claims on pensions and on jobs”.

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