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Report gives North Sea 2 to 3 years
Petroleum News
Stakeholders have a two to three year window to take action to “contain” the United Kingdom Continental Shelf’s production decline, the UK Offshore Operators’ Association said Jan. 14 when it released the results of an annual survey of the investment and development plans of 29 oil and gas producers active in the UK North Sea. The joint survey is conducted jointly by the offshore operators group and the UK’s Department of Trade and Industry.
The trade report on the 2003 activity survey said “that while capital investment in offshore oil and gas developments remains strong, rising unit costs and declining production volumes point to deteriorating economics in the UK North Sea and the challenge ahead for companies to remain competitive and attractive to future investment.”
The trade association said “urgent action by all stakeholders, including government” is needed to increase investment in marginal fields and maximize recovery in producing fields, as well as stimulate exploration for future production.
“Increasing regulatory burden” also needs to be addressed, the association said. Still drawing $5.5 billion per year One key finding indicated capital spending by industry in new UK North Sea offshore developments continues to meet and exceed projections set by Pilot, a government/industry task force which targeted investment to remain above $5.5 billion per year through 2010.
The report said unit operating costs are expected to rise by 60 percent by 2010, “based on currently sanctioned development plans.” 10 new field developments approved in 2003 Despite 10 new field development approvals in 2003, forecasts for near-term oil and gas production continue to slip. Production in 2003 was estimated at just over 4 million boe per day, the report said. 2004 volume predictions are just over 3.7 million barrels of oil equivalent per day, 280,000 boe per day short of last year’s projection.
Pilot’s goal for 2010 daily production was 3 million boe per day. According to the report, 2010 production will fall short by 570,000 boe per day.
Industry production plans “will develop up to a total of 10 billion boe of reserves by 2010, and may develop up to a total of 14 billion boe by 2030.”
But “the challenge: will be to identify ways to find and develop the additional 9-16 billion boe in the UK North Sea “not covered by current plans,” the report said.
“We seem to have failed to convince government that time is of the essence if we are to utilize existing infrastructure to maximize the recovery of oil and gas from the North Sea,” Steve Harris, UK Offshore Operators’ Association’s acting director general, said. EnCana’s Booth calls for combined effort Alan Booth, the association’s president and senior vice president and managing director of EnCana (UK) Ltd., said the strength of investment in the UK Continental Shelf “reflects the ongoing commitment of existing players to maximize the economic recovery of UK oil and gas reserves. It also confirms the sector’s continuing attraction for new companies who see opportunity in the North Sea.
“But ultimately, the sector’s long-term success will depend on the ability of the industry to arrest the current trend that is seeing it spending more to produce less. This will take the combined efforts of industry, the supply chain and government to find new ways to enhance the region’s commercial attractiveness through cost reductions, technology breakthroughs, fiscal incentives and containing the increasing regulatory burden,” Booth said. Wanted: prolonged self-sufficiency, 100,000 more jobs Pilot, which has 23 members and meets quarterly, was established in January 2000 to secure the long-term future of the oil and gas industry in the United Kingdom.
In addition to 3 million boe per day and $5.5 billion in capital and exploration spending, Pilot’s other goals for 2010 include prolonged self-sufficiency in oil and gas; 100,000 more jobs in addition to earlier forecasts; a 50 percent increase in exports by 2005; and to establish the United Kingdom as the safest place in the world to work in the oil and gas industry.
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