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Released April 02, 2019 | GALWAY, IRELAND
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Written by Martin Lynch, European News Editor for Industrial Info (Galway, Ireland)--The U.K. needs oil and gas companies to invest £200 billion ($285 billion) in exploration and production between 2019 and 2035 to fully exploit the remaining resources in the U.K. Continental Shelf (UKCS).
Industry body Oil & Gas U.K. (OGUK) said the amount will need to be spent in existing operations and new opportunities in order to "add a generation of productive life to the basin." However, the group's Business Outlook 2019 report highlighted the difficult times that the industry is facing, stating that a sustained focus on cost and efficiencies with ongoing uncertainty in commodity markets marks the "new reality" for the U.K.'s offshore oil and gas sector. "Continued uncertainty in commodity markets is reinforcing investor caution, with forecasts indicating a conservative outlook for prices," it stated. Cutting costs remains a priority of exploration and production (E&P) companies.
The report noted how fortunes have been revived for the U.K.'s flagging oil and gas sector. Production has increased by 20% over the past five years, following 14 years of decline. E&P companies are looking to maintain unit operating costs at current levels, with operating expenditure running at up to £7.5 billion ($9.9 billion). There is increased exploration activity with up to 15 exploration wells expected in 2019, "including several potentially high-impact prospects."
OGUK Chief Executive Deirdre Michie said: "Our Business Outlook Report 2019 shows that industry's approach during the downturn is delivering results. Following 14 years of decline, production has increased by a fifth over the past five years. Cost improvements are being sustained and there is building momentum around exploration, with more new opportunities being drilled and the largest two conventional discoveries for a decade made in the second half of 2018."
He added: "However, challenges remain across parts of the supply chain, with revenues and margins still under pressure and cash flow stretched. If capabilities and resources are to stay anchored here in the U.K., there must be a competitive proposition for supply chain companies to invest in too. With focus on adding a generation of productive life to the basin, our report reveals around £200 billion will need to be spent to find, develop and operate the reserves of the future. In a year in which output from the U.K. Continental Shelf met around 60% of primary U.K. oil and gas demand, the importance of our hard-fought investment conditions is reinforced -- not only for our industry, but for the U.K. economy."
In 2018, eight wells were drilled and significant discoveries made in four (Garten, Glendronach, Agar-Plantain and Glengorm) of the first six. In total, these four wells have discovered up to 485 million barrels of oil equivalent (boe), equivalent to 78% of produced volumes in 2018. The Glendronach and Glengorm wells provided the largest conventional finds on the UKCS for a decade and Industrial Info is tracking all of the related projects.
Last month, Industrial Info reported that official U.K. government figures showed that oil and gas production rose by more than 4% in 2018. Production averaged 1.7 million boe per day, with oil production rising by almost 9% while gas production fell by 3.5%. For additional information, see March 25, 2019, article - Oil and Gas Production Up 4% in the U.K.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
Industry body Oil & Gas U.K. (OGUK) said the amount will need to be spent in existing operations and new opportunities in order to "add a generation of productive life to the basin." However, the group's Business Outlook 2019 report highlighted the difficult times that the industry is facing, stating that a sustained focus on cost and efficiencies with ongoing uncertainty in commodity markets marks the "new reality" for the U.K.'s offshore oil and gas sector. "Continued uncertainty in commodity markets is reinforcing investor caution, with forecasts indicating a conservative outlook for prices," it stated. Cutting costs remains a priority of exploration and production (E&P) companies.
The report noted how fortunes have been revived for the U.K.'s flagging oil and gas sector. Production has increased by 20% over the past five years, following 14 years of decline. E&P companies are looking to maintain unit operating costs at current levels, with operating expenditure running at up to £7.5 billion ($9.9 billion). There is increased exploration activity with up to 15 exploration wells expected in 2019, "including several potentially high-impact prospects."
OGUK Chief Executive Deirdre Michie said: "Our Business Outlook Report 2019 shows that industry's approach during the downturn is delivering results. Following 14 years of decline, production has increased by a fifth over the past five years. Cost improvements are being sustained and there is building momentum around exploration, with more new opportunities being drilled and the largest two conventional discoveries for a decade made in the second half of 2018."
He added: "However, challenges remain across parts of the supply chain, with revenues and margins still under pressure and cash flow stretched. If capabilities and resources are to stay anchored here in the U.K., there must be a competitive proposition for supply chain companies to invest in too. With focus on adding a generation of productive life to the basin, our report reveals around £200 billion will need to be spent to find, develop and operate the reserves of the future. In a year in which output from the U.K. Continental Shelf met around 60% of primary U.K. oil and gas demand, the importance of our hard-fought investment conditions is reinforced -- not only for our industry, but for the U.K. economy."
In 2018, eight wells were drilled and significant discoveries made in four (Garten, Glendronach, Agar-Plantain and Glengorm) of the first six. In total, these four wells have discovered up to 485 million barrels of oil equivalent (boe), equivalent to 78% of produced volumes in 2018. The Glendronach and Glengorm wells provided the largest conventional finds on the UKCS for a decade and Industrial Info is tracking all of the related projects.
Last month, Industrial Info reported that official U.K. government figures showed that oil and gas production rose by more than 4% in 2018. Production averaged 1.7 million boe per day, with oil production rising by almost 9% while gas production fell by 3.5%. For additional information, see March 25, 2019, article - Oil and Gas Production Up 4% in the U.K.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Our European headquarters are located in Galway, Ireland. Follow IIR Europe on: Facebook - Twitter - LinkedIn For more information on our European coverage send inquiries to info@industrialinfo.eu or visit us online at Industrial Info Europe.
