Oil & Gas UK Economic Report 2015

beginning to pay off, demonstrated by the annual rate of production decline from existing fields slowing to just over four per cent in 2014, compared to 15 to 20 per cent over 2011 and 2012. The reduction in the number of unplanned outages and better general reliability are signs of the improvement in asset management. This has been achieved through means such as the activities of the Production Efficiency Taskforce, sponsored by both Oil & Gas UK and government. With greater confidence in the performance of the existing asset base, Oil & Gas UK also expects new start-ups to have a further beneficial impact on production over the next few years. New fields that have come on-stream since 2010 accounted for over ten per cent of total UKCS production in 2014. Production from new fields over the next three to

four years is anticipated to sustain the upturn over the remainder of the decade while also lowering unit costs (typically forecast to be £6-12/boe). For the basin as a whole, the combination of both a falling cost base and a slowing production decline rate means a significant improvement in average UOCs on the UKCS. From an average of £17.80 in 2014, the cost of producing a barrel of oil or gas could fall to around £15/boe by the end of 2016.

1

2

3

4

5

Figure 16: Production Changes (New versus Existing Fields)

6

569

570

Contribution from New Fields Reduction from Existing Fields

560

7

550

548

548

545

8

540

532

530

9

Total Production (Million boe)

520

521

10

0

2014/15

2015/16

Source: Oil & Gas UK

31

ECONOMIC REPORT 2015