North Sea set to resume 20-year long decline in output from next year as Big Oil giants drill ‘easy fields’ dry

The North Sea is set to resume a 20-year long decline in oil production next year, ending a brief period of growth since 2015, according to an expert industry report.

Production in the North Sea, home to the Brent global crude benchmark, peaked in 1999 at 2.6 million barrels per day (bpd) and fell steadily until 2014, when it hit around 800,000 bpd. In the past four years, output has stabilised or even recovered.

The halt to the decline stemmed from the start-up of several new fields such as the BP-operated Quad 204 west of the Shetland Islands and Enquest’s Kraken field east of them.

The revival was due also to improved output from existing fields as operators slowed the natural decline of reservoirs by accelerating drilling around wells, a process known as infill drilling, and ran platforms better, according to a report from the Bernstein consultancy.

It said: “Decline rates improved from around 18 percent in 2012 to 8 percent in 2016 and 5 percent in 2017, the report said. Output from fields naturally decreases as they age and their resources dwindle.

“The stability and even growth from 2015 to 2018 will prove temporary in nature for this 1 million bpd basin,” the report said.

“Production from the UK North Sea, considered the world’s first deepwater oil basin, is expected to grow by 4 percent, or roughly 40,000 bpd, in 2018 – before declining from 2019 to 2021.”

The decline in output has had a profound impact on North Sea producers.

Smaller, independent and often privately owned companies such as Siccar Point, Neptune and Chrysaor that specialise in extending the life of ageing fields are gradually replacing Big Oil giants such as Royal Dutch Shell and BP, which were among the first to develop the basin but see less opportunity there today.

28 Mar 2018

 

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