UK oil production jumped 8.9% in 2018 to a seven-year high of 1.09 million bpd. The increase was driven by improved production efficiency and the more than 30 new fields that have come on stream since 2015, according to a new report by the Oil and Gas Authority (OGA).
But natural gas output dipped 3.5% to 610,000 boepd, bringing growth in oil and gas output combined to just over 4%.
The OGA forecast that UK crude oil output would decline in 2019 to 1.04 million bpd, from 1.09 million bpd in 2018. The downtrend will continue over the next five years, with crude output hitting 840,000 bpd in 2024, it forecast.
Capital expenditure is forecast to fall back, slipping to GBP3.5 billion (US$4.55 billion) by 2021 from an anticipated GBP5.2 billion (US$6.9 billion) this year, the OGA said. And by 2024, it sees capex sinking as low as GBP2.55 billion (US$3.4 billion) – less than half the forecast for 2019.
The agency was more upbeat about the UK’s long-term production outlook than in recent years, saying it now anticipated cumulative production of oil and gas to reach 11.9 billion boe by 2050. This is 3.9 billion barrels – or nearly 50% – higher than the 8 billion boe it predicted in March 2015, and 200 million boe higher than it projected just six months ago.
The OGA partly credits new discoveries for the uptick in its long-term forecasts. Finds such as Glendronach and Glengorm "highlight the future potential of the basin, which could be boosted further with new investment, exploration successes and resource progression," said Loraine Pace, its head of performance, planning and reporting.
Improvements in the efficiency of North Sea oil and gas recovery plus a reduction in operating costs have also helped, the OGA said.
But while operating costs have been decreasing over the past three years, hitting an average of GBP11.60 (US$15.35) per barrel last year, the OGA believes they are once again on the rise, albeit a relatively slow one. It sees costs lifting to GBP12.30 (US$16.28) this year and then to GBP12.90 (US$17.08) by 2024.