UK NORTH SEA
UK North Sea Oil & Gas Review By Tsvetana Paraskova
It was another busy month for the UK oil and gas industry between mid-February and the middle of March—several reports highlighted future opportunities and companies continued to plan for drilling and development on the UKCS. Oil and gas production in the UK rose by more than 4 percent in 2018 to average 1.7 million barrels of oil equivalent per day, the Oil and Gas Authority (OGA) said in a report in March. Oil production alone jumped by 8.9 percent annually to 1.09 million bpd last year—the highest UK oil production rate since 2011. Higher activity on the UKCS pushed total operating cost (OPEX) up by 6.4 percent in 2018, while unit operating cost (UOC) rose marginally by 2.2 percent, indicating stable cost efficiency, the OGA said. Capital expenditure (CAPEX) declined for the fourth year in a row, but this downward trend is expected to be reversed as early as this year, with a 4-percent increase in UK oil and gas upstream investment, according to the OGA. The report also estimates that UK oil and gas production over the period 2016–2050 is projected to be 3.9 billion barrels of oil equivalent (boe) higher than projections made four years ago, in March 2015. “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,” said Loraine Pace, Head of Performance, Planning and Reporting at the OGA.
Commenting on the OGA report, Oil & Gas UK’s Upstream Policy Director, Mike Tholen said: “This is a significant milestone for an industry emerging from one of the toughest downturns in memory. However, in a competitive global market where the competition for investment is intense, it remains critical to maintain the fiscal and regulatory conditions which have supported this solid production performance delivered by industry.” On March 13, the UK government published the Spring Statement with expected fiscal receipts from the offshore industry and launched a call for evidence to identify what more could be done to further strengthen Scotland and the UK’s position as a global hub for decommissioning.
ing closely, we can together create an enduring benefit to both our world-class supply chain and the nation,” Oil & Gas UK Chief Executive Deirdre Michie said, commenting on the call for evidence. The UK has been driving the decommissioning market in Europe and the world, Rystad Energy said in a report in February. Europe, led by the UK, has been the most active market for offshore decommissioning in recent years, with a global market share of more than 50 percent. “The UK alone is forecasted to spend more than $2 billion annually on decommissioning activities within the next three years,” according to the energy research firm, which expects decommissioning worldwide to hit a record US$36 billion over the next three years.
“We want to understand how a domestic UK decommissioning industry could best serve the UK market, ensuring we have the skills and capability to meet domestic demand while encouraging the industry to export its decommissioning expertise abroad and position the UK as a global leader,” the Minister of State for Energy and Clean Growth, Claire Perry, said in the statement launching the call for evidence, which is open until 8 May 2019.
While the industry prepares for the drilling campaign this year, Rystad Energy has identified a deep-water well west of the Shetland Islands planned to be drilled by Hurricane Energy as one of the 30 most exciting wildcats of 2019. The pre-drill estimate for Hurricane Energy’s well stands at 935 million boe, while the company has indicated a 77-percent chance of success, Rystad said in February.
“The UK is leading the way as a decommissioning centre of excellence through both effective cost leadership and technical expertise. Work-
Also in February, Unite the union said that offshore membership had voted overwhelmingly for industrial action on the Elgin-Franklin,
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