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ACTIVITY SURVEY
2016
page 20
Figure 9: Average Annual Production Decline from Existing Assets
0%
5%
10%
15%
20%
25%
2005-2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015
Production Decline from Existing Assets
Source: Oil & Gas UK
To complement the exceptional performance from existing assets, field restarts played an unusually significant
role in the production improvement last year, contributing an additional 43 million boe. Elgin Franklin, Rhum,
Shearwater, Banff, Gannet, Pierce and Andrew are examples of fields that were previously shut-in for various
reasons but have now come back on-stream and are increasing in output.
New field start-ups also boosted production, although project delays meant that their impact was not as significant
as expected. Although eight new fields began production last year, around the same number again slipped into
2016, adding to the growing concerns over the timeliness of project execution on the UKCS. Helping to offset these
delays were Kinnoull and the Golden Eagle Area, both of which came on-stream during the final quarter of 2014
and increased output throughout the course of 2015 as they ramped up towards plateau production.
Operating Expenditure in 2015
After a four-year period where the average annual increase in operating expenditure was ten per cent, operators
were under severe pressure to cut their costs last year, particularly against the backdrop of a falling oil price. The
pace of cost reduction has been far quicker than anticipated, with £1.7 billion removed from existing assets on the
UKCS over the last 12 months. This has been partially offset by £0.2 billion in new field start-up costs, resulting
in a net decrease of £1.5 billion and bringing total operating expenditure for the basin down from £9.7 billion to
£8.2 billion.
Operators’ concentrated focus on achieving cost reductions and efficiency improvements, in conjunction with
the collective efforts of the pan-industry Efficiency Task Force, have delivered much needed results, helping many
assets maintain a positive cash flow position despite falling prices.