Oil & Gas UK Economic Report 2014

Performance for the first half of 2014 has been encouraging, with DECC’s figures indicating a one per cent increase in production compared with the same period in 2013. Output of liquids has risen by 1.7 per cent, but that of gas has fallen slightly, albeit by just one per cent. There are two main reasons for this welcome improvement: i. Following a number of years of major investment, new fields are having a material effect on production, particularly Breagh, Huntington and Jasmine. More than ten per cent of production in 2014 is expected to come from fields that came on-stream in 2013 or 2014. ii. Since the start of last year, production has re-started on Elgin-Franklin (following a gas leak), Gryphon (weather damage) and

the Penguins cluster (loss of export route), all of which produced well below capacity in the first half of 2013 after being shut for extended periods. The final figures for production in 2014 will largely depend upon the industry’s performance during the summer maintenance season. Figure 10 shows the traditional dip in output during the summer months as various installations and pipelines are closed for maintenance, upgrading or modification to accommodate a new field being tied into existing facilities. Even when accounting for this expected drop in production, provisional data for the year so far suggest that, for the first time since 2000, there is a reasonable chance that there will not be an overall decline in UKCS production.

Figure 10: Monthly Production Trends from 2010 to 2014

90

2010 2011 2012 2013 2014

80

70

60

50

40

30

20

Monthly Production (Million boe)

10

0

Source: DECC, Oil & Gas UK

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ECONOMIC REPORT 2014