UK oil and gas production has increased for the first time in more than 15 years as new fields come on stream and infrastructure investment pays off, Oil & Gas UK has said.
But while welcoming the rise in production, Oil & Gas UK chief executive Deirdre Michie warns that the industry will be challenged to sustain it in future years.
Michie said the total volume of oil and gas produced on the UK Continental Shelf (UKCS) was up 8.6% compared with 2014, with the production of liquids up 10.6% and gas up 6.1%.
“Output in November and December tends historically to be more stable, but even so, Oil & Gas UK now expects year end production for the full year of 2015 to be 7 to 8% higher than last year,” she said.
In February 2015 Oil & Gas UK predicted a marginal increase in production for 2015. But Michie said attempts to improve production efficiency along with investments of more than £50bn over the last four years to bring new fields on stream across the past 12 months were paying off.
“Oil company Taqa announced first production from the Cladhan field north-east of Shetland, estimated to produce 10,000 barrels of oil a day from the UK’s waters,” Michie said. But she added the UK offshore oil and gas industry is having to adapt to the low oil price which is driving greater efficiencies throughout its operations.
“The fact is that the value of our product has more than halved. Times are really tough for this industry and for the people working in it. We will continue to see job losses as we move into 2016,” she said.
Michie said the UK oil and gas industry supply chain generates tens of billions of pounds annually in domestic and export sales, and was the envy of the rest of the world.
In 2016 Oil & Gas UK’s industry will start to see results from a project encouraging operating companies to share inventories and results of a study into compression systems.
In addition, Michie said the industry was aiming to reduce drilling costs by 50 per cent to boost competitivity.