UK oil and gas industry had a successful year in 2018, as it saw oil and gas production increase by more than 4% in 2018, averaging 1.7 million boe per day. This was mostly achieved by oil production, as gas production declined, a new report from the Oil and Gas Authority reveals.
OGA said on Friday that UK oil and gas production over the period 2016–2050 is now projected to be 3.9 billion barrels of oil equivalent (boe) higher than projections four years ago (in March 2015).
Compared with the previous projection last year, this is equivalent to gaining an additional four years of production (at the present rate) from the UK’s currently largest producing oil field, OGA said.
In 2018, oil production alone rose to 1.09 million barrels per day – up 8.9% on the previous year and the highest UK oil production rate since 2011.
This increase can be attributed to over 30 new fields coming onstream since 2015, improved production efficiency and asset integrity, the realization of enhanced oil recovery (EOR) projects and the UK’s offshore licensing rounds’ continued focus on associated exploration, appraisal and development commitments, OGA added.
Gas output, Capex decline
While oil production grew, gas production fell by 3.5% to 0.61 million boe per day; Operating Costs (OPEX) rose slightly and capital expenditure again fell significantly in the basin.
Total operating cost (OPEX) rose by 6.4% driven by higher activity, while 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, OGA said.
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 (2019–2023) projection for decommissioning expenditure is down 18% from the previous assessment last year.
Head of Performance, Planning and Reporting at the OGA, Loraine Pace, 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 revitalize exploration, through Area Plans and promoting new technologies.”