North Sea oil: Drill, maybe, drill FROM a distance the Elgin platform looks like an insignificant speck against the featureless expanse of the North Sea. It is only when you approach the oil-and-gas structure that outsize pipes and valves make its bulk apparent. Economically, too, Britain's oil and gas industry is much mightier than it seems - but it is an unruly giant, and not always benign. With Britain's economy hovering around zero growth, tremors in the North Sea can have a big effect. In March 2012 Elgin began leaking gas, leading to a year-long shutdown. With Buzzard, one of the region's largest oilfields, also closed for maintenance last autumn, production plunged. Falling oil and gas output was the main reason Britain's economy shrank by 0.3% in the last quarter of 2012. It had also helped knock the economy into recession a year earlier. Britain's fields are old and in long-term decline. But the immediate news is better, both for the industry and for George Osborne, the chancellor of the exchequer. Drillers are coming back to British waters. Over the next few years fresh investment will bring a mini-bonanza that will boost output from the equivalent of under 1.5m barrels of oil a day to 2m, according to Oil & Gas UK, a trade body (see chart). That should mean a handy boost to government revenues, already over £7 billion ($10.9 billion) in the 2012-13 fiscal year. The North Sea is a forbidding place to do business. Offshore oilfields are expensive, and ageing ones especially so. Infrastructure built in the 1960s and 1970s, when the area was first developed, can be unreliable and costly to keep running. Delays for maintenance are lengthening. And the age of British fields is not the only drawback for oil companies, which operate and allocate capital globally. In recent years they have found more welcoming homes for their cash. Oilfields need lots of money invested over a long time, so the industry prizes stable taxes as much as striking a gusher. On that count Britain has proved a great disappointment over the past decade. The latest blow came in 2011, when Mr Osborne raised the "supplementary charge" to 32% of profits, giving a total effective tax rate, including corporation tax and petroleum revenue tax, of between 62% and 81%, depending on the age of the field. Indeed, the charge, introduced in 2002 at 10% and raised to 20% in 2006, is blamed for some of the recent slowdown. The 2006 increase probably accounts for a big drop in field development in 2008 and 2009, which fed through to lower output by 2011. What, then, accounts for the rebound? A high oil price has helped. So has the extension of small-field allowances, important in a well-explored region where big finds are less common, and improved terms for gloopy heavy oil, which is pricier to extract and process. A brownfield allowance is encouraging smaller firms, such as Talisman and Apache, to buy less-productive older assets that the supermajors are leaving to concentrate on bigger, more profitable projects elsewhere. An increasingly active market for assets that can be better drained of oil by smaller specialists got another helping hand in the 2013 budget. After long negotiations the industry won a deal to guarantee tax relief on decommissioning costs irrespective of future changes to tax rates. That is crucial, as it could cost over £30 billion to clear up the platforms and pipelines. Abu Dhabi's Taqa says this is mainly why it spent $1.2 billion on BP's Harding field. Certainty about future costs also frees up capital. Nurturing Britain's oil industry has other advantages too. Convincing investors of the stability of its tax regime will help as the government tries to lure investors onshore to drill for shale gas. And a booming North Sea helps a buoyant oil-services industry, which uses the region as a test-bed for its technology. Exports accounted for £6 billion of its £27 billion revenues in 2011. But it might not boost Mr Osborne's political fortunes. The splurge of investment is unlikely to pay off handsomely until after the next general election, due in 2015.