The oil and gas industry regulator has raised its forecast of what can be recovered from the waters around the UK over the next three decades. Changes in the way the sector operates are thought to have unlocked the potential for a further 2.8 billion barrels of oil or the gas equivalent, BBC reported.
It is now estimated that 11.7 billion barrels could be recovered between 2016 and 2050. More than 43 billion barrels have been extracted from UK waters so far. Peak production was achieved at the turn of the century.
The Oil and Gas Authority’s increased estimate for the offshore industry partly reflects new investment. While the oil price was high, in the first half of this decade, oil companies approved a series of major investment programs that gave the UK offshore sector a second wind.
The new report suggests that spending was greater than previously reported. It also shows operating cost per barrel of oil produced has halved since 2014, at least in US dollars, reaching just above $15. Some of this spending was for developing so-called brownfield sites, where fields were mature and new technology was required to pump more from the rock formations.
Most expenditure was in new fields, many of them to the west and east of Shetland. The last of that phase of new fields is expected to come on stream in the next few months. As a result, the industry’s production total rose from 1.4 million barrels of oil equivalent per day to 1.63 million barrels in 2016—returning to the level seen in 2011.
Production during 2018 is expected to be higher than that of last year, but will start declining from 2020. In 2014, having been commissioned by Whitehall, industry veteran Ian Wood produced a report that set out a plan for maximizing economic recovery of oil and gas.
Setting up the Oil and Gas Authority as the new regulator, based in Aberdeen, was part of his plan. It was given powers to require coordination by oil producers and to ensure they did not close down assets prematurely.
The authority’s report of projections of production also extends to expenditure. It expects to see investments continue further into the future than it had previously expected, but that there will still be a decline.
Capital expenditure has continued to fall significantly, and will continue to do so, says the authority.