WIRELINE Issue 35 Spring 2016

attract investment in the future and the industry’s $15/boe target certainly takes us in the right direction. Q: Does this mean more bad news on the jobs front? A: Over the course of 2015, industry efforts saw total expenditure fall by almost £5 billion. This restructuring has been painful for many, especially those tens of thousands who are estimated to have lost their jobs. The immediate desire for cash flow and ongoing transformational change mean that more efficiency gains and expenditure reductions are inevitable during the course of 2016, making further contraction in employment likely. We’re looking to provide an update this summer on the number of jobs supported by the industry. Q: What will happen to production if little new investment is approved? A: We know that strong and sustained investment does translate into higher

production. The Activity Survey identified – and the Oil and Gas Authority has since confirmed – a ten per cent increase in production last year, which is a direct result of significant annual capital expenditure in the five years to 2014. Unfortunately, the converse is also true. There is a real risk that fields due to cease production in the next five years will simply not be replaced by new projects, and, as a result, domestic oil and gas production is forecast to decline sharply beyond the end of this decade, though the Chancellor’s announcements on 16 March should help pave the way to address this. Q: Is the low oil price speeding up decommissioning? A: Industry is determined to avoid premature decommissioning and to retain the infrastructure required to maximise economic recovery. However, the Activity Survey does show that the number of fields expected to stop producing between 2015 and 2020 has risen by one fifth over the past year to just over 100.

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