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Despite its notoriety as a legacy producing region, the UK’s continental shelf yielded 20 percent more oil and gas in the last five years after 14 consecutive years of production declines, the industry’s association, Oil and Gas UK, said in its latest annual Business Outlook.
The figure for 2018 was 1.7 million barrels of oil equivalent daily and it covered 59 percent of the country’s oil and gas demand, the industry body noted, adding that newly approved projects last year exceeded the total number for the previous three years combined, at 13. These, OGUK said, will tap into 400 million barrels of oil equivalent. Capital spending on these projects is estimated at around US$4.37 billion (3.3 billion pounds).
Exploration in the UK’s North Sea is definitely picking up and this year could see the drilling of up to 15 new wells, the association also said. This is momentum that needs to be maintained, the association noted, as expectations were for another decline in production to begin after 2020.
Over the longer term, the investment flow will need to keep flowing into new exploration and production to keep output rising. In its Vision 2035, OGUK estimated the industry needed to add another generation to the productive life of the UK’s continental shelf and said this would need investments of around US$264.8 billion (200 billion pounds).
Meanwhile, ownership and operatorship patterns are changing, the industry body said in its report. Private equity firms are increasing their holdings in the UK continental shelf, and so are some energy independents. Interestingly enough, these independents are focusing on legacy fields, to which they are applying a “fit-for-purpose” approach.
This focus may have something to do with the low rate of successful discoveries, which sank to a record low last year. Even so, optimism about exploration persists, perhaps thanks in no small part to the fact that two of the biggest conventional oil and gas discoveries in the UK’s continental shelf were made last year, Glendronach and Glengorm.
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.