By OGJ editors
HOUSTON, Mar. 7 -- Continuation of offshore UK investment at the elevated level foreseen this year could cut the rate of production decline on the UK Continental Shelf (UKCS) by half through 2016, an industry group says.
The group, Oil & Gas UK, reports in an activity survey published late last month that investment might reach £8 billion this year, up from less than £5 billion in 2009 and $6 billion in 2010.
If companies move forward with all the development plans they’re considering, investment would stay at the higher rage for the next 5 years and might lower the production decline rate of the UKCS to 3%/year, Oil & Gas UK says. For the past 10 years, the decline rate has been 6-7%/year.
“The investment could also lead to a further 10,000-15,000 jobs in the supply chain across the UK,” the group says.
Recent UKCS investment has received a lift from approval of new large-field developments west of the Shetland Islands and in the central North Sea and, to a lesser extent, northern North Sea.
Last year, investment began in 13 new oil and gas fields and in four major redevelopment projects.
Oil & Gas UK notes 67 potential new-field developments representing an estimated 3.1 billion bbl of recoverable oil. The 10 largest of those projects account for more than 60% of the predicted capital expenditure. Four of them are west of Shetland, three are in the central North Sea, and three are in the northern North Sea.
Output down 5%
Average UK production last year was 2.3 million boe/d, down 5% from the 2009 level. Plans, including for additional incremental recovery from existing fields, and development of new fields, target reserves of 11.6 billion boe, 1.3 billion boe more than targeted a year earler.
Oil & Gas UK says it believes the UKCS still holds 24 billion boe of recoverable oil and gas.
In 2010, the group reports, operators drilled 62 exploration and appraisal wells, two thirds of which were exploratory. The total compares with 65 wells last year.
Of the 2010 exploration and appraisal wells, about one third were successful, adding 300-400 million boe to reserves. Oil & Gas UK expects operators to drill a similar number of exploratory and appraisal wells this year, with spending in this category exceeding £1.3 billion.
Operating costs last year totaled $6.9 billion, up 5% from 2009.
Because of production declines, unit operating costs rose by 10% in 2010. Discoveries “were materially smaller than those found in younger oil and gas provinces elsewhere,” Oil & Gas UK says.
UKCS operators face decommissioning costs of £29 billion over the next 30 years, 11% higher than last year’s forecast.
Elevated investment might halve UKCS output decline
By OGJ editors