UK North Sea Oil and Gas Production May Slump 22% in 2013

on Aug 21, 2013
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iNVEZZ.com Wednesday, August 21st: The production efficiency of Britain’s existing North Sea oilfields remains in “worrying decline” despite an increase in investment this year, Oil & Gas UK has said. According the industry group which represents offshore operators in British waters, North Sea oil production will slump by more than expected in 2013 as ageing platforms lie idle while they undergo maintenance and repairs.

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In its annual economic activity report released today, Oil & Gas UK lowered its forecast for daily production in 2013 to 1.2 – 1.4 million barrels of oil equivalent (boe), as compared to the earlier estimate of 1.45 – 1.5 million boe. The predicted slump of as much as 22 percent will mark the second-largest annual fall since the decline in North Sea oil production started at the turn of the century.

**Investment Peaking but Output Fails to Rise Fast**
Oil & Gas UK also forecast that offshore capital investment in North Sea would reach a record £13.5 billion in 2013, as much as £6 billion above the level achieved two years ago. Reportedly, 15 new fields with combined reserves of 470 million boe per day will come on stream this year, up from nine fields with 146 million boe per day in 2012, the group said.

Higher oil prices and new technological solutions that increase the cost efficiency of developing old fields have encouraged producers to invest, as has the introduction of tax incentives for developers of technically challenging new fields. Large projects approved recently include BP’s (LON:BP) $4.5-billion
Clair Ridge project and Statoil’s (NYSE:STO) $7-billion Mariner heavy oilfield, the largest in the UK for more than a decade.

Oil & Gas UK’s Chief Executive Officer Malcolm Webb said that he remained optimistic that the recent wave of investment in new discoveries and rising output from old fields could eventually lift oil and gas output in North Sea back to the two-million-boe mark. In February, Oil & Gas UK said this target could be hit by 2017. Now, however, the group suggests the goal may not be achieved until the end of the decade.

The delay is due to falling efficiency and ongoing maintenance programmes, Oil & Gas UK said.
!m[Oilfields’ Efficiency Remains in “Worrying Decline”, Oil & Gas UK Warns](/uploads/story/4983/thumbs/pic1_inline.jpg)
Increased emphasis on safety after BP’s Gulf of Mexico oil spill in 2010 and the age of the North Sea oil and gas platforms mean that they are spending more time offline while maintenance is carried out.
According to Oil & Gas UK, the platforms stand idle for an average of 146 days a year, twice as long as four years ago, with efficiency — the time they are producing oil and gas —at 60 percent last year, against 80 percent in 2008.
“Despite impressive investment in new developments, the production efficiency of existing assets remains in worrying decline,” Bloomberg quoted Webb as saying in an e-mailed statement.

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