Oil & Gas UK Activity Survey 2016

Figure 28: Production Outlook

1

3.0

2

2.5

2.0

3

High Case

Central Case

1.5

Low Case

4

1.0

Production (Million boepd)

0.5

5

0.0

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

6

Source: Oil & Gas UK

Looking beyond 2016, production is forecast to rise above 1.7 million boepd by 2018. Over 40 per cent of total production in that year is anticipated to come from fields that have started production or seen significant redevelopment since 2013. Very few new start-ups are currently scheduled post-2018, a consequence of the anticipated lack of new developments sanctioned over 2016 and 2017. As a result, there are increasing concerns that the UKCS will be exposed to another collapse in production at the start of the next decade. There is a clear lack of fresh investment opportunities. On a net basis, around 1.1 billion boe of potential reserves across 79 projects have been removed from company development plans over the last 12 months (see section 5.1 on reserves). Potential development projects that do remain in company portfolios seemunlikely to be commercially viable in current market conditions and would require significant cost reductions or price support to proceed. Without a material improvement in the economics of these prospects, production is likely to decline by up to 50 per cent over the next ten years. Continued investment in both the current asset base and new field developments throughout the downturn will be critical to sustain indigenous production in the long term and underpin security of primary energy supply. Key to achieving this is ensuring that the industry continues to bear down on its costs with support from an internationally competitive fiscal regime and an effective economic regulator.

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