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North Sea crude oil and condensate production will decline by 40,000 bpd next year as fewer new projects come online, according to research from ESAI Energy. Before that, however, production will rise by 50,000 bpd to reach some 2.9 million bpd this year.
The increase this year will come on the back of new projects and “light maintenance schedules,” ESAI Energy said as quoted by Trend news agency, which will offset the depletion of legacy fields in the area.
In its report, ESAI Energy noted that explorers in the North Sea had benefited from higher oil prices like the rest of the industry, despite field depletion.
“By renegotiating service contracts and focusing on the most promising fields, companies have been able to bring online projects, sanctioned at higher crude prices, profitably. Producers in the UK also received a small assist from the government in the form of reduction in the headline tax rate from between 50-65 to 40 percent,” the research company said.
The North Sea has seen quite a lot of activity recently. Earlier this year, Shell struck a deal with Chrysaor to sell it most of its assets there for $3.8 billion, significantly reducing its decommissioning costs associated with the mature fields.
BP, another giant with a substantial presence in the area, agreed to sell its Forties pipeline network – the oldest and largest in the North Sea – for $250 million to UK-based chemicals company Ineos, which is set on building a presence in the area.
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At the same time, some explorers are making new discoveries, potentially significant. Hurricane Energy, for example, announced in early April that it has struck what’s possibly the biggest untapped oil deposit in the UK continental shelf.
The Greater Lancaster Area may contain as much as 590 million barrels of crude – an upward revision from Hurricane Energy’s 2013 assessment of the field, which stood at 200 million barrels. Potentially— but it could rise to as much as 1 billion barrels. Production, however, will only start in 2019, at an initial target rate of 17,000 bpd.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.