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North Sea oil and gas production reaches seven-year high



There’s life in the North Sea yet! A report released by the UK Oil and Gas Authority (OGA) this week reveals a significant spike in production from the UK Continental Shelf, with more than 25 million extra barrels of oil produced in 2018 over 2017. 
The OGA's report indicates there's still plenty of oil and gas production to be gained from the UK Continental Shelf
(The OGA’s report indicates there’s still plenty of oil and gas production to be gained from the UK Continental Shelf. Image via Chevron).

With an average of 1.7m barrels of oil equivalent (boe) produced per day in 2018, the North Sea saw production last year hit a peak not seen since 2011, when a rate of 1.81m boe per day was achieved.

The ‘Projections of UK Oil and Gas Production and Expenditure Report’ also sets out a positive picture for the years ahead, with the authors estimating that UK oil and gas production over the period 2016-2050 is projected to be 3.9 million boe higher than projections four years ago (in March 2015).

The report attributes the increase in production to the over 30 new fields which have come onstream since 2015. Other factors that have boosted production include improved production efficiency and asset integrity, the realisation of enhanced oil recovery (EOR) projects, and the UK’s offshore licensing rounds’ continued focus on associated exploration, appraisal and development commitments.

Other findings of note from the report include:

  • Total operating cost (OPEX) rose by 6.4% driven by higher activity, whilst unit operating cost (UOC) rose only marginally by 2.2%, from £11.4/boe in 2017 to £11.6/boe in 2018, indicating stable cost efficiency.

  • Capital expenditure (CAPEX) fell for the fourth straight year. This downwards trend of UK oil and gas upstream investment is however, expected to be halted in 2019, with a 4% increase projected.

  • Annual decommissioning expenditure has risen year on year since 2015, with 2017 to 2018 seeing a 9% increase to £1.45 billion, reflecting a higher level of decommissioning activity taking place. The five year outlook (201902023) projection for decommissioning expenditure is down 18% from the previous assessment last year.

  • Commenting on the report, Loraine Pace, Head of Performance, Planning and Reporting at the OGA, said:

    “The 3.9 billion barrels identified is great news with 2018 being a productive year. New discoveries such as Glendronach and Glengorm highlight the future potential of the basin which could be boosted further with new investment, exploration successes and resource progression. The OGA continually supports industry in efforts to revitalise exploration, through Area Plans and promoting new technologies”.

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