Outlook for the UKCS in 2005

The following provides an outlook for the UKCS and is based on survey data compiled by UKOOA with DTI in December 2004. It is the first time UKOOA has itself aggregated the plans and encompasses the business plans of over 50 oil and gas companies, both members and non-members. As in previous years, projections include some assumed slippage. The outlook differentiates between:-

• Sanctioned fields which are already in production or are currently being developed,
• Incremental developments of existing producing fields frequently referred to as “Brownfield” developments,
• New field developments which are typically tied back to existing infrastructure.

Probable developments have a possibility of greater than 50% of proceeding, possible developments have a possibility of less than 50% of proceeding.

Production

Total production (oil and gas combined) was 3.6 million barrels of oil and gas equivalent per day (boepd) in 2004. It declined at a higher rate in 2004 than previously anticipated because of unexpected and prolonged outages from several fields in late summer. However, investment activity is continuing to strengthen and UKOOA projects that incremental production on existing fields and new field developments will halve the rate of decline out to the end of the decade with production in 2005 and 2006 projected at 3.4-3.5 and 3.4 million boepd respectively.

Figure 24: UKCS Total Production Overview: 2003 – 2010

Total production to the end of this decade is projected to improve by 2% above last year’s forecast, based on higher than anticipated oil output over the latter half of this decade.

The latest signs indicate that it is increasingly likely that the industry will achieve the PILOT vision of producing 3 million barrels per day of oil and gas in 2010. In the last year, the projected outlook for 2010 improved by 0.2 million boepd to 2.6 million boepd. It is anticipated that further investment will continue to bring new production on-stream to close the gap.

Figure 25: Projected UKCS Production in 2010

The UK produced 725 million barrels of oil/liquids during 2004. The decline in oil / liquids is projected to flatten out over the next few years benefiting from increased development activity. When compared against last year’s plans, it has strengthened by 4% to the end of the decade, extending the UK’s self-sufficiency for oil to 2009/10. The improvements arise both from new fields discovered relatively recently which are expected to come on-stream in 2006 and 2007 and increased investment in and production from existing fields.

Figure 26: UKCS Liquids Production Overview: 2003-2010

New field developments, including Buzzard (200,000 boepd), Callanish & Brodgar (60,000 boepd) and Tweedsmuir (30,000 boepd) in the Central North Sea, will effectively cause oil production to plateau over the next two to three years and halve the rate of decline through to the end of the decade.

Gas production was 95 billion m³ in 2004, some 6.8% below production in 2003 and consistent with previous projections from UKOOA. UK gas production peaked at 330 million m³/d, against peak winter demand of 420 million m³/d. Gas production is expected to decline at around 6% per annum over the near term. However, new gas discoveries continue to be made both in the West of the Shetlands and North Sea which will contribute in due course.

Figure 27: UKCS Gas Production Overview: 2003-2010