Business Outlook 2020 - Autumn Snapshot

BUSINESS OUTLOOK 2020: Autumn Snapshot

Production

Oil Production

Gas Production

Production levels have remained relatively strong despite the operational challenges being faced, however provisional figures show that production in the first three quarters of the year was slightly lower than in 2019. When considering year-on-year output for the same time period, production has fallen by 2.5 per cent so far this year and is around 3 per cent lower than the 2019 full-year daily average. It should be noted though that production in the first half of 2019 was particularly strong due to the ramp up from some significant projects. Oil production so far this year is almost 5 per cent down on the 2019 year-to-date and full- year averages, with gas production 2 per cent higher than 2019 year-to-date levels and in line with the 2019 full-year average. Oil production in late summer has been impacted by some planned terminal outages and unplanned production shutdowns. It is possible that output may recover closer to 2019 levels in the fourth quarter. Despite the slight reduction, maintaining this level of output is a significant achievement considering the operational challenges faced this year. The industry has continued to provide crucial energy security to the UK throughout the pandemic. The UKCS achieved 80 per cent production efficiency last year — the highest level since 2004 and meeting the OGA and industry target. 3 A continued focus on operational efficiency and the deferment of many maintenance outages to reduce COVID-19 exposure and operational risk may help support levels of production efficiency in the short term, however any production gains from this could be offset by lower activity levels and some unplanned production outages.

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Average Monthly Oil Production per Year

Average Monthly Gas Production per Year

35

30

25

20

15

10

5

Monthly Oil and Gas Production (Million boe)

0

July

July

July

July

July

July

May

May

May

May

May

May

March

March

March

March

March

March

January

January

January

January

January

January

November

November

November

November

November

September

September

September

September

September

September

2015

2016

2017

2018

2019

2020

Source:BEIS

Lower levels of new production are now expected to come onstream in 2020 and 2021 in comparison with recent years, due to the operational impact of COVID-19 and the low commodity prices. Combined with lower than expected levels of barrel-adding activity taking place, this will likely have a negative impact on output into 2021 and 2022.

3 www.ogauthority.co.uk/benchmarking/ukcs-production-efficiency-2019/

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