Industry

Oil in the Surrey Hills could raise £86m in tax, Europa tells inquiry

The public inquiry into plans to drill in the Surrey Hills heard this morning about the estimated volume and value of oil.

Alastair Stuart, a geologist for Europa Oil and Gas, said a site near Leith Hill could produce between 0.26m and 2.6m barrels of oil over its life. But he said the probability ranged from 90% for the lower figure and only 10% for the higher, if oil were encountered during exploration. UK daily oil consumption is 1.5m barrels.

Mr Stuart was giving evidence in support of Europa’s proposals for an exploratory oil well at Bury Hill Wood, in the Surrey Hills Area of Outstanding of Natural Beauty.

He said that at current tax rates the estimated volume of oil could raise £86m for the Treasury. But under cross-examination from Stephen Whale, for Leith Hill Action Group, he admitted that Europa’s drilling proposal would not raise anything in tax because it was an exploration, not a production, well.

Mr Stuart rebutted suggestions that Europa would not be able to meet its financial obligations if there were an accident at the proposed well. He said the company had been formed in 1994 and was floated on the Alternative Investment Market in 2004. It had successfully drilled many wells and was responsible for production in the UK, he said.

The inquiry also heard that Europa’s drilling licence for the area around the proposed well expires this year. Andrew Newcombe, the barrister for Europa, said the licence would run out in September but he added:  “I have it from the chief executive today that arrangements are in hand to extend the licence to September 2016. These arrangements are already underway”.

The inquiry continues this afternoon.

Also this morning: Europa refuses to rule out production at exploration site

Background to the inquiry

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