LONDON: Britain’s North Sea energy output will fall this year more sharply than forecast in February as ageing fields grow less productive and need more maintenance, and it will not start to pick up until 2015, Oil & Gas UK said.
The industry association also highlighted in a report yesterday that the production efficiency of existing North Sea oil fields “remains in worrying decline” despite an upsurge in investment this year.
Drops in oil and gas output have held back Britain’s economy in recent years, hitting attempts to stimulate growth, which is expected to be a major issue in the 2015 general election. The body’s forecasts disappoint expectations for the pace of a revival.
The group said it now expected production of between 1.2 million and 1.4 million barrels of oil equivalent per day (boepd) this year, with similar output in 2014, before an improvement begins.
In February it had forecast that Britain would pump 1.45 to 1.5 million boepd this year before production would start to climb in the 2014-17 period, representing the first rise since 1999.
Oil and gas production has fallen by about two thirds since 2000, posting particularly steep falls of 14.5 percent last year and 18 percent in 2011.
In its annual economic report, Oil & Gas UK also softened its medium-term outlook for North Sea production to reach two million boepd by 2017, to say it could “potentially” rise towards that level in three years’ time.
Offshore UK oil and gas capital investment would reach a record £13.5bn ($21bn) in 2013, as much as 6 billion pounds more than two years ago, the report said.
“Despite impressive investment in new developments, the production efficiency of existing assets remains in worrying decline,” Malcolm Webb, the body’s chief executive, said.
Not only is production declining fast from ageing fields, some of which have been in production for more than three decades, but old infrastructure costs more and takes longer to be kept sound, while more unplanned maintenance is needed.
North Sea platforms are standing idle for an average of 146 days a year, or only pumping oil and gas for 60 percent of the year compared with 80 percent of the year in 2004.
The divergence between lower output and higher spending reflects the cost inflation affecting the whole industry plus the extra spending required to squeeze out reserves.