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UK production decline ‘worrying’

UK production decline ‘worrying’

Despite record investment this year of £13.5 billion in the UK oil and gas industry, North Sea output from UK waters is declining sharply.

Oil and Gas UK said in its annual report that output fell 19% during 2011 and 14% in 2012.

A further decline of at least 8.5% is projected for this year.

Output may rise from 2015 following high investment levels, currently at £13.5 billion.

“Because of challenging geology and unplanned shutdowns on offshore platforms, the unit cost per barrel for extracting oil from British waters, known as the UK Continental Shelf (UKCS), has gone up four-fold over the past decade,” a BBC story said.

UK Oil and Gas said it’s “a worrying trend that could have a major influence on the longevity of the UK Continental Shelf.”

Several fields now cost more than £40 per barrel to operate.

UK oil and gas production supports about 450,000 jobs, the trade group said, while generating £40 billion a year, including £7 billion in export earnings.

The UK has an estimated 15 to 24 billion barrels of oil or the gas equivalent remaining to be developed, with a potential value of £1.5 trillion.

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