Research and analysis

Extractive industries in the UK: background information on the extractive industries

Published 25 February 2019

The extractive sector has made a sizeable contribution to the UK economy for many years, supporting substantial added value in downstream industries and related supply chains in addition to its direct output. As illustrated in Figure 1, below, by far the largest economic contribution comes from oil and gas production even though the value of that sector has halved in recent years. There is currently no UK state participation in the extractive industries.

Figure 1. Extractive Industry Gross Value Added (GVA)

Source: UK GDP(O) low level aggregates, ONS, December 2018.

In some of the summary information below, coal is grouped with oil and gas (for example where data are available for fossil fuels but not for other parts of the sector). However, for most of this chapter, oil and gas are treated separately from mining and quarrying, including coal. In addition, it should be noted that the phrase “mining and quarrying” as used in UK national statistics embraces the whole UK extractive sector including oil and gas production as well as coal production. Mining support services are also included in this sector. Some of the data reported below include those activities while other data exclude them.

Value of the sector

Table 1 shows GVA for the main components of the mining and quarrying sector as reported in UK national statistics. As noted above, this sector includes fossil fuel production, other mining and quarrying and mining support service activities, but excludes the value of products manufactured with extracted minerals. The table gives for each subsector its percentage share of total UK GVA for the most recent year. It also shows the whole sector’s GVA as a percentage of national gross domestic product (GDP) for each year.^{[footnote 1]}

Table 1. Gross Value Added (GVA) (£ million)

	Mining of coal and lignite	Extraction of crude petroleum and natural gas	Other mining and quarrying	Mining support service activities	Total mining and quarrying etc	Total GVA	Total GDP	Total
	(A)	(B)	(C)	(D)	(E) = (A)-(D)	(F)	(G)	(E) / (G)
1990	2,876	7,815	1,207	944	12,843	611,573	1.3%	656,249
1991	2,962	8,234	1,272	994	13,463	641,456	1.3%	694,472
1992	3,026	8,618	1,331	1,042	14,018	663,486	1.3%	722,555
1993	2,008	9,674	1,011	1,167	13,861	699,486	1.4%	755,783
1994	1,300	11,069	985	1,335	14,690	733,775	1.5%	795,283
1995	1,427	12,903	1,461	1,412	17,204	767,205	1.7%	836,686
1996	1,230	16,371	1,602	1,790	20,994	820,116	2.0%	889,454
1997	1,124	13,564	1,745	1,559	17,993	857,444	1.6%	939,407
1998	1,222	11,673	1,203	1,325	15,424	893,067	1.3%	976,101
1999	463	13,361	919	1,241	15,985	924,758	1.4%	1,023,888
2000	420	20,187	1,696	1,973	24,277	976,824	2.1%	1,076,299
2001	692	18,500	1,997	1,814	23,004	1,015,239	1.8%	1,118,669
2002	499	17,764	2,095	1,946	22,305	1,064,659	1.7%	1,166,105
2003	400	17,730	1,994	1,908	22,033	1,127,457	1.6%	1,234,309
2004	218	18,395	1,908	1,906	22,428	1,180,753	1.6%	1,300,783
2005	89	21,978	2,294	2,271	26,633	1,251,115	1.8%	1,363,898
2006	213	26,571	2,250	2,227	31,262	1,321,047	2.0%	1,451,140
2007	87	25,706	2,349	2,227	30,370	1,388,286	1.9%	1,519,969
2008	433	29,882	2,529	2,890	35,735	1,429,641	2.1%	1,584,212
2009	205	21,475	2,398	3,213	27,292	1,399,987	1.5%	1,539,850
2010	993	25,325	2,129	2,136	30,584	1,429,621	1.8%	1,572,710
2011	399	26,572	2,525	2,670	32,167	1,468,323	1.8%	1,631,374
2012	359	22,151	3,076	2,811	28,398	1,514,910	1.5%	1,678,699
2013	107	22,035	3,053	2,407	27,603	1,573,223	1.4%	1,743,711
2014	211	18,595	3,140	2,339	24,286	1,645,955	1.1%	1,827,014
2015	164	14,686	2,957	2,285	20,093	1,692,039	0.9%	1,883,051
2016	116	12,747	3,277	2,134	18,275	1,756,045	0.7%	1,946,324
2017	127	15,870	3,636	2,330	21,964	1,844,287	0.9%	2,027,471
%	0.0%	0.9%	0.2%	0.1%	1.2%	100.0%	-	-

The percentages in the last row are shares of total GVA for all industries in the latest year shown.

Source: GDP output approach – low-level aggregates, ONS, February 2019
UK Economic Accounts: main aggregates, ONS, December 2018.

The following table gives a finer breakdown of the sector in the latest recent year for which data are available to give a sense of the scale of activity in each subsector. Although the data in both this table and the one above are sourced from official Office of National Statistics (ONS) data, they are not identical. Note that in value terms support service activities are almost entirely related to extraction of petroleum and natural gas.

Table 2. Mining and Quarrying (including Oil and Gas) – number of enterprises, GVA and employment costs in 2017

SIC 07 Code	Description	Number of enterprises	Approximate gross value added at basic prices (aGVA)	Total employment costs
		Number	£ million	£ million
06	Extraction of crude petroleum and natural gas	150	12,618	2,079
09.1	Support activities for petroleum and natural gas extraction	218	2,378	1,674
08.11	Quarrying of ornamental and building stone, limestone, gypsum, chalk and slate	232	857	410
08.12	Operation of gravel and sand pits; mining of clays and kaolin	168	791	381
08.92	Extraction of peat	16	20	4
08.93	Extraction of salt	8	89	27
09.9	Support activities for other mining and quarrying	161	27	9
B	Mining and quarrying	1,234	16,984	4,716

Source: Non-financial business economy, UK (Annual Business Survey): 2017 provisional results, ONS, November 2018.

Government revenues

UK government accounts cover a financial year running from April–March rather than a calendar year, so some of the data on government revenues reported in this chapter are of necessity on a financial year basis. Where possible, calendar year data are (also) provided. The data relate only to the oil and gas sector, not mining and quarrying. This is because oil and gas companies have a distinct tax regime, allowing identification of their extractive-related tax payments (and repayments), whereas mining and quarrying companies pay mainstream corporation tax. This means the data for extractive-related tax receipts from mining and quarrying companies cannot be separated out. More details on tax revenues can be found in the oil and gas and mining and quarrying standalone chapters.

Section 106^{[footnote 2]} payments are made (in England, plus equivalent payments made elsewhere in the UK) to local authorities relating to the granting of planning permission for mining operations to cover, for example, local road and infrastructure improvements. These are the only mandated social expenditure by extractive companies.

There are no non-monetary arrangements between extractive companies and the government in the UK.

Forecasts of UK government oil and gas revenues are published by the independent Office for Budget Responsibility (OBR). The OBR also publishes details of its underlying forecasts of oil and gas production, prices and expenditure broken down between exploration and appraisal, development capital expenditure, operating costs and decommissioning costs.

Exports

Table 3 includes ONS trade data for the mining and quarrying sector (including oil and gas) on the value of gross exports, gross imports and net imports. The UK both imports and exports all types of mining and quarrying production but is generally a net importer of each type.

Table 3. Value of Mining and Quarrying (including Oil and Gas) Exports and Imports

Gross exports

£ million BOP Basis	Gross Exports 2013	Gross Exports 2014	Gross Exports 2015	Gross Exports 2016	Gross Exports 2017
Coal	91	60	49	49	61
Lignite	0	0	0	0	0
Coal & lignite	91	60	49	49	61
Crude petroleum	18,652	17,653	10,653	9,920	15,236
Natural gas	2,149	1,862	2,255	1,292	1,798
Crude petroleum & natural gas	20,801	19,515	12,908	11,212	17,034
Iron ores	3	6	3	0	0
Non-ferrous metal ores	11	8	20	39	56
Metal ores	14	14	23	39	56
Unworked stone, gravel, sand etc	253	291	264	265	289
Mining & quarrying products n.e.c	3,747	612	533	799	1,281
Other mining & quarrying product	4,000	903	797	1,064	1,570
Mining & quarrying	24,906	20,492	13,777	12,364	18,721
Total Goods	300,390	293,116	286,752	299,073	338,739
Total Trade	523,526	520,292	519,610	556,961	617,039

Gross imports

£ million BOP Basis	Gross imports 2013	Gross imports 2014	Gross imports 2015	Gross imports 2016	Gross imports 2017
Coal	2,878	2,179	1,138	487	739
Lignite	0	0	0	0	0
Coal & lignite	2,878	2,179	1,138	487	739
Crude petroleum	25,477	21,497	11,817	10,508	16,242
Natural gas	10,442	7,407	6,478	6,011	8,420
Crude petroleum & natural gas	35,919	28,904	18,295	16,519	24,662
Iron ores	1,127	892	495	423	619
Non-ferrous metal ores	469	420	371	404	613
Metal ores	1,596	1,312	866	827	1,232
Unworked stone, gravel, sand etc	277	319	312	334	389
Mining & quarrying products n.e.c	3,757	876	692	1,009	1,419
Other mining & quarrying product	4,034	1,195	1,004	1,343	1,808
Mining & quarrying	44,427	33,590	21,303	19,176	28,441
Total Goods	419,380	415,187	404,562	431,725	475,774
Total Trade	552,562	549,967	546,594	587,848	641,472

Net imports

£ million BOP Basis	2013	2014	2015	2016	2017
Coal	2,787	2,119	1,089	438	678
Lignite	0	0	0	0	0
Coal & lignite	2,787	2,119	1,089	438	678
Crude petroleum	6,825	3,844	1,164	588	1,006
Natural gas	8,293	5,545	4,223	4,719	6,622
Crude petroleum & natural gas	15,118	9,389	5,387	5,307	7,628
Iron ores	1,124	886	492	423	619
Non-ferrous metal ores	458	412	351	365	557
Metal ores	1,582	1,298	843	788	1,176
Unworked stone, gravel, sand etc	24	28	48	69	100
Mining & quarrying products n.e.c	10	264	159	210	138
Other mining & quarrying product	34	292	207	279	238
Mining & quarrying	19,521	13,098	7,526	6,812	9,720
Total Goods	118,990	122,071	117,810	132,652	137,035
Total Trade	29,036	29,675	26,984	30,887	24,433

Source: UK trade in goods, CPA (08) ONS, December 2018
Balance of Payments: Trade in Goods & Services: Total imports: CP SA £m ONS, December 2018.

Gross exports in 2017 amounted to 3.0% of total UK gross exports.

Table 4 includes data published by BEIS on the volume and value of gross exports, gross imports and net imports of fossil fuels (coal, oil and gas).

Table 4. Volume and Value of Coal, Oil and Gas Exports and Imports

Volume of exports

Year	Coal (mtoe)	Oil (mtoe)	Natural Gas (mtoe)	Oil & Gas (mtoe)
2013	0.448	36.192	9.429	45.622
2014	0.319	33.774	10.998	44.772
2015	0.290	36.867	13.716	50.583
2016	0.333	38.180	10.048	48.228
2017	0.369	42.040	10.802	52.842

Value of exports

Year	Coal (£ million)	Oil (£ million)	Natural Gas (£ million)	Oil & Gas (£ million)
2013	90	17,460	2,510	19,970
2014	55	14,625	2,000	16,625
2015	45	9,915	2,310	12,225
2016	50	9,200	1,350	10,550
2017	60	12,835	1,830	14,665

Volume of imports

Year	Coal (mtoe)	Oil (mtoe)	Natural Gas (mtoe)	Oil & Gas (mtoe)
2013	32.888	64.489	47.139	111.628
2014	27.581	58.676	42.041	100.718
2015	14.885	55.407	43.127	98.534
2016	5.812	53.479	45.980	99.458
2017	5.807	58.480	45.133	103.613

Value of imports

Year	Coal (£ million)	Oil (£ million)	Natural Gas (£ million)	Oil & Gas (£ million)
2013	3,235	30,010	10,985	40,995
2014	2,260	24,335	7,635	31,970
2015	985	12,645	6,990	19,635
2016	565	11,200	6,150	17,350
2017	710	16,165	7,565	23,730

Volume of net exports

Year	Coal (mtoe)	Oil (mtoe)	Natural Gas (mtoe)	Oil & Gas (mtoe)
2013	-32.440	-28.297	-37.710	-66.006
2014	-27.262	-24.902	-31.043	-55.945
2015	-14.596	-18.540	-29.411	-47.951
2016	-5.479	-15.299	-35.931	-51.230
2017	-5.437	-16.441	-34.330	-50.771

Value of net exports

Year	Coal (£ million)	Oil (£ million)	Natural Gas (£ million)	Oil & Gas (£ million)
2013	-3,145	-12,550	-8,475	-21,025
2014	-2,205	-9,710	-5,635	-15,345
2015	-940	-2,730	-4,680	-7,410
2016	-515	-2,000	-4,800	-6,800
2017	-650	-3,330	-5,735	-9,065

Source: Digest of UK Energy Statistics (DUKES) 2018

Employment

Table 5 gives estimates of the total UK workforce jobs directly supported by the UK mining and quarrying sector including its major sub-sectors. It also shows the estimates as shares of the total workforce jobs for all industries. The extractive industries are typically capital- rather than labour-intensive and correspondingly represent a significantly smaller share of workforce jobs than of GVA.

Table 5. Workforce jobs estimates

(thousand)	Mining of coal and lignite Extraction of crude petrol / gas [SIC (2007) Divisions 05-06]	Mining of metal ores Other mining and quarrying [SIC (2007) Divisions 07-08]	Mining support service activities [SIC (2007) Division 09]	Total mining & quarrying etc [SIC (2007) Section B]	Total Industries [SIC (2007) Sections A-T]
2013	22	18	30	70	32,168
2014	21	17	29	68	33,223
2015	20	21	30	71	33,763
2016	18	21	24	63	34,339
2017	15	19	25	59	34,682
2017	0.0%	0.1%	0.1%	0.2%	100.0%

Source: Regional labour market statistics in the UK, ONS, December 2018

Table 6 shows estimates of extractive industry employment in Great Britain (GB) (for instance the UK excluding Northern Ireland) at a finer level of disaggregation than is available for the workforce jobs estimates for the UK.

Table 6. Extractive Industry Employment in Great Britain and United Kingdom (in thousands)

SIC 2007	Industry	2013	2014	2015	2016	2017
GB 05101	Deep coal mines	2.2	1.6	0.9	*	-
GB 05102	Open cast coal working	2.4	1.3	1.1	*	1.2
GB 05	Mining of coal	4.6	2.9	2.0	1.1	1.3
GB 06	Extraction of crude petroleum and natural gas	15.5	16.6	15.7	15.2	12.2
GB 08110	Quarrying of ornamental and building stone; limestone; gypsum; chalk and slate	4.9	6.7	7.4	8.6	7.7
GB 08120	Operation of gravel and sand pits; mining of clays and kaolin	7.0	7.1	7.7	6.9	7.0
GB 081	Quarrying of stone; sand and clay	12.0	13.8	15.1	15.5	14.7
GB 08930	Extraction of salt	0.3	0.4	0.4	0.3	0.3
GB 08990	Other mining and quarrying n.e.c.	1.1	1.1	1.3	1.2	0.9
GB 089	Mining and quarrying n.e.c.	2.4	2.7	3.2	2.4	2.0
GB 08	Other mining and quarrying (other than mining of metal ores)	14.4	16.4	18.3	17.9	16.7
GB 091	Support activities for petroleum and natural gas extraction	21.2	25.1	22.4	18.8	19.4
GB 099	Support activities for other mining and quarrying	0.4	0.3	0.4	0.4	0.3
GB 09	Mining support service activities	21.6	25.4	22.9	19.2	19.8
GB 05–09	Total Extractive Industries	56.1	61.3	58.9	53.4	50.0
GB 06, 09	of which Oil and Gas Extraction and Support Services	36.7	41.7	38.1	34.0	31.6
UK 05, 06	Mining of coal and lignite; Extraction of crude petrol/gas	22	21	20	18	16
UK 07, 08	Mining of metal ores; Other mining and quarrying	18	17	21	21	19
UK 09	Mining support service activities	30	29	30	25	27
UK 05–09	Total Extractive Industries	70	68	71	64	63

Notes:

• data for 2014 and 2015 come from the provisional rather than revised results.
• employment is defined as employees plus working proprietors.
• figures are rounded to the nearest thousand and to one decimal place. For example, 2.4 is equal to 2,400 and represents a figure in the range 2,350–2,449. Figures may not add up due to rounding.
• cells containing an asterisk (*) represent disclosive data that cannot be published.
• cells containing a hyphen (-) represent a zero or less than 50.

Source: ONS, Business Register and Employment Survey (Table 2a).

All extractive employment shown in the tables above is in the private sector.

Extractive industry employment levels have fallen markedly from their historic peak decades ago, mainly due to the decline of the coal industry, but extractive-related activities still contribute significantly to local employment in a number of regions.

Regional location of extractive industries

The broad geographic spread of employment in the UK extractive sector (including oil and gas and mining support service activities) is illustrated in Table 7. The concentration of employment in Scotland reflects the dominance of the Aberdeen area in terms of oil and gas-related activity. While the importance of the sector for the Scottish economy is no surprise, the relatively high share of activity in the East Midlands is noteworthy.

Table 7. Regional distribution of extractives activity

Gross Value Added (Income Approach – see notes 1 and 2) at current basic prices (£ billion): Mining and quarrying including oil and gas

Region name	2013 (£ billion)	2014 (£ billion)	2015 (£ billion)	2016 (£ billion)	2017 (see note 3) (£ billion)
North East	0.34	0.38	0.28	0.25	0.28
North West	0.17	0.18	0.27	0.27	0.31
Yorkshire and The Humber	0.32	0.33	0.29	0.29	0.32
East Midlands	0.48	0.56	0.46	0.50	0.59
West Midlands	0.10	0.11	0.12	0.11	0.13
East of England	0.17	0.24	0.23	0.23	0.29
London	0.27	0.19	0.18	0.21	0.22
South East	0.47	0.45	0.33	0.32	0.36
South West	0.45	0.39	0.22	0.22	0.31
England	2.76	2.82	2.37	2.39	2.81
Wales	0.25	0.24	0.23	0.25	0.29
Scotland	2.74	2.72	2.62	2.76	3.28
Northern Ireland	0.13	0.13	0.14	0.15	0.18
Extra-Regio (see note 4)	21.72	18.38	14.74	12.73	14.84
United Kingdom	27.60	24.29	20.09	18.28	21.40

Notes:

1. Estimates of workplace based GVA allocate incomes to the region in which the economic activity takes place

2. Components may not sum to totals as a result of rounding.

3. Provisional.

4. The GVA for Extra-Regio comprises compensation of employees, holding gains and gross trading profits which cannot be assigned to regions.

2017 shares of UK less Extra-Regio (Extra-Regio of UK): Mining and quarrying including oil and gas

Region name	Gross Value Added	Gross Trading Profits	Compensation of Employees
North East	4.3%	5.2%	3.3%
North West	4.8%	6.4%	2.7%
Yorkshire and The Humber	4.8%	5.4%	4.0%
East Midlands	8.9%	11.4%	6.7%
West Midlands	2.0%	2.1%	1.5%
East of England	4.4%	5.2%	3.2%
London	3.4%	3.2%	2.1%
South East	5.5%	6.7%	3.9%
South West	4.7%	4.7%	4.5%
England	42.9%	50.3%	31.8%
Wales	4.4%	5.4%	3.4%
Scotland	49.9%	41.2%	62.4%
Northern Ireland	2.8%	3.1%	2.4%
Extra-Regio (see note 4)	69.3 %	79.2%	56.8%
Share of GVA	100.0%	64.7%	33.8%

Note 4. The GVA for Extra-Regio comprises compensation of employees, holding gains and gross trading profits which cannot be assigned to regions.

2017 shares of UK less Extra-Regio (Extra-Regio of UK): all industries

Region name	Gross Value Added	Gross Trading Profits	Compensation of Employees
North East	3.0%	2.7%	3.1%
North West	9.5%	9.7%	9.8%
Yorkshire and The Humber	6.6%	5.8%	7.0%
East Midlands	5.8%	5.5%	6.1%
West Midlands	7.4%	7.2%	7.8%
East of England	8.7%	8.7%	8.6%
London	23.5%	26.1%	22.3%
South East	14.7%	14.9%	14.2%
South West	7.4%	6.8%	7.5%
England	86.6%	87.3%	86.4%
Wales	3.4%	3.0%	3.6%
Scotland	7.8%	7.5%	7.9%
Northern Ireland	2.2%	2.2%	2.2%
Extra-Regio (see note 4)	0.9%	2.7%	0.6%
Share of GVA	100.0%	22.5%	55.4%

Note 4. The GVA for Extra-Regio comprises compensation of employees, holding gains and gross trading profits which cannot be assigned to regions.

Source: Regional gross value added (income approach), UK: 1997 to 2017, ONS, December 2018.

Almost all UK oil and gas production comes from fields located offshore. Maps showing the location of oil and gas fields in GB and on the UK Continental Shelf (UKCS) are published online by the Oil and Gas Authority (OGA). These maps also show which areas are under licence offshore and onshore in Great Britain. A map showing which areas are under licence in Northern Ireland is published by the Northern Ireland Department for the Economy (DfE) but there is as yet no production there.

The majority of coal production comes from sites in Scotland, England and South Wales, as mapped by the Coal Authority. The mining and quarrying of non-hydrocarbon minerals are widely distributed across the UK. There are no significant hard-rock aggregate deposits in the South and East of England, so these materials are transported for use in these regions from further afield in the Midlands and South West in particular.

UK fossil fuel production and UK energy demand

UK production of fossil fuels has been, and continues to be, significant in terms of meeting UK energy demand. This is particularly true of oil and gas but, nowadays, much less so for coal. While the share of total demand represented by fossil fuels has been declining, they still account for more than four fifths of total primary energy demand and are forecast to account for more than two thirds of total primary energy demand even in 2035.^{[footnote 3]}

Figure 2. UK fossil fuel production and primary energy demand

Source: Energy Trends: total energy, Table 1.3, December 2018.

Figure 3. Destination of UK oil production and sources of UK oil supply, 2017

Source: Digest of UK Energy Statistics (DUKES), July 2018 (principally Table G4).

Figure 4. UK monthly gas supply

Source: Energy Trends: gas, tables 4.2 and 4.3, December 2018.

Figure 5. Sources of UK gas supply on a rolling 12 month basis

Source: Energy Trends: gas, tables 4.2 and 4.3, December 2018.

1. Generally, in this chapter, unlike in the ONS table and some other official sources, a terminological distinction is made between “oil and gas” and “[other] mining and quarrying”, the latter comprising the extraction of coal and of all non-hydrocarbon minerals. In this report, as in last year’s, we have included mining support service activities in the total for the sector when calculating its contribution to GDP. ↩

2. Section 106 of the Town and Country Planning Act 1990. ↩

3. Energy and emissions projections. ↩