UK North Sea’s oil production is expected to revert to a decline again next year, after a brief period of growth since 2015, according to consultants at Bernstein.
Since peaking at 2.6 million bpd in 1999, the UK Continental Shelf (UKCS) production had been in decline until 2014, after which, thanks to start-ups and improved production from existing fields with infill drilling, oil production has stabilized.
“The stability and even growth from 2015 to 2018 will prove temporary in nature for this 1 million bpd basin,” Bernstein said in a report on Monday, quoted by Reuters.
Production efficiency has slowed the decline of the mature fields, and according to Bernstein, production efficiency of wells and platforms on the UKCS rose to 73 percent in 2016 from 60 percent back in 2012, which accounted for a 200,000-bpd increase in production between 2012 and 2016.
This year, production in the UK North Sea is expected to increase by 4 percent, or by 40,000 bpd, before declining from 2019 to 2021, according to Bernstein. Related: The Truth Behind Oil’s Recent Price Spike
According to the UK Oil & Gas Authority, production was an estimated 1.63 million barrels of oil equivalent per day, the same rate as in 2016. “This was despite the Forties’ pipeline closure in December 2017, without which production would have risen slightly,” the authority said earlier this month.
The trade association Oil & Gas UK expects 2018 production to increase by 5 percent, making this year’s oil production 20 percent higher than five years ago. While the industry body said that unit operating costs have halved since 2014 and post-tax cash flow is the highest it has been in seven years, it warned that without greater exploration success, improved recovery from existing fields, and improved commercial viability of existing discoveries, production would revert to a decline in just two years’ time.
Production is expected to grow over the next two years before the lack of investment that we saw during the downturn begins to have an impact or swings production into a decline, Oil & Gas UK said in its Business Outlook last week.
By Tsvetana Paraskova for Oilprice.com
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