ECONOMICS OF ONSHORE OIL EXPLOITATION.

Despite the dramatic fall in oil prices in 1986 investment in the U. K. 's onshore exploration and development can still remain attractive. Very small fields of 0. 5 million barrels or less of recoverable reserves may not be viable on a pre-tax basis and larger fields requiring considerable gathering facilities and water injection (or substantial environmental expenditure) may also be fairly marginal on a pre-tax basis depending on assumptions regarding future oil prices. The tax system is generally regressive in its impact both with respect to changes in oil prices and exploitation costs. The royalty is primarily responsible for this outcome. PRT (Petroleum Revenue Test) is payable only on comparatively large fields.