North Sea production could finally reverse its 15-year downward trend this year as new fields come onstream and production efficiency measures take hold.
According to the Department of Energy and Climate Change provisional 2015 production figures, UK Continental Shelf (UKCS) production rose 2.5% in 1H 2015 compared to the same period last year.
Oil & Gas UK believes the improved performance is partly due to new production, especially from Nexen's large Golden Eagle field (pictured), which came onstream in November 2014, but also due to stronger delivery from existing assets.
The figures come following years of production rate decline, at rates faster than anticipated, on the UKCS. Between 2010-13, production fell 38% in the basin.
Much of the drop has been blamed on low production efficiency rates, which fell from 80% to 60% in the 10 years to 2014. Wrench time - when workers are unable to work - has also been high, at an average four hours based on a 12-hour working shift.
In addition, natural field decline has also been putting downward pressure on production figures, with some assets moving towards decommissioning, including Shell's Brent fields and CNR's Murchison facility.
Deirdre Michie, Oil & Gas UK's CEO, says: “It’s still early days, but initial indications suggest that production could increase this year for the first time in 15 years. Provisional data for the first six months of 2015 show liquids production to be up around 3% and net gas production to be up around 2.5% this year, compared to the first six months of last year. Production in 2Q looks particularly encouraging and early figures suggest that May saw the most oil and gas produced on the UKCS since March 2012.
“We will be able to discuss annual estimates with more certainty by the end of the summer maintenance season, as figures for July and August are historically the most uncertain.”
Michie added: "Clearly the oil price – which has more than halved since this time last year – continues to really challenge the industry. However, this positive news can indeed be attributed to the effort and investment industry has put into improving the integrity and performance of UKCS assets – something we’ll look to explore in further detail in our Economic Report 2015.
“At our Annual Conference earlier this summer, I opened the discussion around how the oil and gas industry must become sustainable in a world with a considerably lower oil price. As demand for our products remains strong, critical for our transport and heating our homes and giving us a whole host of everyday products, it is imperative we continue on this journey if we are to continue to ensure the UK remains a commercially attractive and predictable place in which to invest.”
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