Onshore oil favours independent firms

Onshore oil drilling is favourable to independent companies rather than major oil industry firms, it has been claimed.

Speaking for an FT Energy Weekly podcast, Anthony Lobo, partner and head of oil and gas at KPMG, explained that while the UK produces 1.6 million barrels of oil a day through both onshore and offshore drilling, onshore only accounts for 1.5 per cent of that.

"If you take the majors, the onshore assets make up such a small part of their portfolio and the return on their capital is so insignificant in terms of their overall portfolio," Mr Lobo said.

"But for the independents, there is an opportunity to make good returns on relatively small assets," he added.

In this way, onshore oil drilling, in the UK at least, favours smaller companies.

Britain's first drilling campaign for shale gas in Lancashire has identified that some 5,660bn cubic metres of gas lie beneath the county, but much may be unrecoverable and campaigners are concerned that fracking could affect groundwater aquifiers.