Low oil price could force 140 North Sea oil fields to close

Low oil prices could force the closure of around 140 oil fields in Britain's North Sea in the coming five years, according to a report released Wednesday by consultants Wood Mackenzie.

Wood Mackenzie forecast that the number of fields would become economically unviable even if the price of Brent crude extracted from the North Sea returned to around $85 per barrel from the current level of around $50.

"A high oil price (in 2011-2014) has enabled operators to extend field life and delay decommissioning time ... however the current low oil price has brought into stark relief that this cannot continue indefinitely," Wood Mackenzie wrote.

The fall in crude prices by around 60 percent since June 2014 has in particular weighed on the ageing oil fields and platforms in the North Sea.

"Last year, more was spent than was earned from production, a situation which has been exacerbated by the continued fall in commodity prices," said Deirdre Michie, chief executive of Oil & Gas UK industry association, which released a similar report on Wednesday.

"This is not sustainable..." she added.

Oil & Gas UK's report found that the sector has cut 65,000 jobs since the start of 2014 from its peak of 440,000.

In the current context, oil firms are likely to shutter more fields, said Wood Mackenzie.

"The fields most likely to be decommissioned are uneconomic without high oil prices to justify escalating maintenance costs and declining production which are unable to support the high operating costs," said Fiona Legate, Wood Mackenzie's analyst for UK upstream research.

Low oil prices could also force the postponement or even cancellation of the 38 new North Sea fields expected to open in the coming five years, the consultancy warned.

The extreme depth of the North Sea deposits makes them costly to recover.

But Oil & Gas UK was more cautious in its outlook.

"The industry is determined to avoid premature decommissioning and retain the infrastructure required to" get as much oil as economically viable out of the North Sea, said the report.

It estimates only around two thirds of recoverable fuel have been extracted.

Not only has the government cut taxes and taken other measures to help, but Oil & Gas UK expects the industry will have reduced the cost of operating their existing assets by 22 percent by the end of 2016.