UK offshore production rebounds after years of decline

Recent provisional figures from Britain’s Department for Energy (DECC) suggest oil and gas production across the UK continental shelf (UKCS) during the first six months of this year could be 2.5% up on the same period last year.

Deirdre Michie, CEO of Oil & Gas UK, commented: “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 the second quarter of the year 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.”

Oil & Gas UK attributes part of the improvement to growing production from CNOOC/Nexen’s large Golden Eagle field in the UK central North Sea, which started up last November, and to stronger delivery from existing North Sea facilities. 

Michie added: “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.”

Last week, the association issued more optimistic findings from its Business Sentiment Index for 2Q 2015.

These showed that the UK oil and gas industry confidence remains fragile at current oil prices, but that companies’ outlook in general is improving.

The Index measures economic indicators including business confidence, activity levels, business revenue, investment, and employment.

Oonagh Werngren, Oil & Gas UK’s operations director, said: “While the overall index remains in negative territory for the fourth quarter in a row, this slight improvement in mood is the first upward movement we have seen since 1Q 2013.

“On one hand, a large number of companies are concerned about a further decline in activity, the challenge of managing costs and how these factors will impact employment. On the other hand, a few respondents have reported higher activity than in the first quarter which may be due to preparations for the annual summer maintenance programs when activity levels traditionally increase on the UKCS.

“Another reason for the modest improvement in mood is that a number of companies have already put significant effort into tackling cost and improving efficiency and are beginning to see the impact of these efforts. While contractors cite uncertainty regarding future orders as a concern, they also highlight improvements in how their clients engage with them to identify cost-effective ways to address the current business climate.”

Source: Offshore -