The UK’s North Sea oil and gas industry is on track to record its biggest year for field start-ups in a decade, according to a report published at the Offshore Europe conference and exhibition in Aberdeen.

Oil and gas hits new high in North Sea

The report from consultants Wood Mackenzie said that 14 projects with a combined peak production of 230,000 barrels of oil equivalent per day (bpd) will start in the zone this year – the most since 2007.Mhairidh Evans, senior research analyst for North Sea upstream at Wood Mackenzie, said, “It’s really the fruits of a very high level of investment in the 2010 to 2014 period. Really, 2017 is the last year of that tranche of projects.”Eight fields have already started up this year with an estimated peak production of 140,000 bpd. Wood Mackenzie said that, most recently, Total had announced the start of its Edradour and Glenlivet fields in west of the Shetland Islands, which will add as much as 56,000 bpd at their peak.In a separate report from the industry body Oil & Gas UK said that almost $6 billion-worth of mergers and acquisitions had taken place in the sector in the first half of the year, despite continuing difficulties in the market.The organisation’s Economic Report 2017, issued at Offshore Europe, said the UK industry was reinventing itself by differentiating itself from competing oil and gas regions with efficiency gains, fiscal competitiveness and a world-class supply chain. Production had increased by 16 per cent since 2014 thanks to these efficiencies and new start-ups, the report said.

Maintaining oil and gas in the UK through efficiency

Deirdre Michie, chief executive of Oil & Gas UK, said, “There are still serious issues facing our industry which has suffered heavy job losses since the oil price slump.“But we are hopeful that the tide is turning and expect employment levels to stabilise if activity picks up.“Our sector is successfully re-positioning through efficiency and cost improvements. We are transforming in a way that is getting UK oil and gas back in the game.“Although we are getting to a much better place, we still need further investment to generate new activity and sustain hundreds of thousands of UK jobs.“While industry will maintain its relentless focus on improving its cost and efficiency performance, government can continue to play its part – by developing a clear energy policy that reinforces the role for oil and gas in the Industrial Strategy, supporting a Sector Deal and confirming in the Autumn Budget that decommissioning tax relief will be modified to support further investment activity.”The report identified “tentative signs that investor confidence is starting to return to the sector, and to the UK” even though the International Energy Agency has predicted UK oil output will decline every year from 2019 to 2022.“We urgently need to secure capital to bring new projects into the UK continental shelf to prevent the potential significant production decline that could occur post-2020,” said Mike Tholen, upstream policy director at Oil & Gas UK.Deloitte in Aberdeen described the latest report as demonstrating a “cautious optimism” was returning to the North Sea sector, while KPMG said “the future is bright”.

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A spokesman for the Department for Business, Energy and Industrial Strategy said, “As this report highlights, the oil and gas sector is taking on the challenges it has faced in recent years and is becoming more efficient and competitive as a result.“The industry continues to deliver significant economic benefits to the UK, by supporting more than 300,000 jobs, and meeting around half of the UK’s primary energy needs.“The UK government is working with the sector to build on the £2.3 billion-worth of UK government support through our modern Industrial Strategy.”For related news and features, visit our Enterprise section.Access hundreds of global services and suppliers in our Online Directory  Get access to our free Global Mobility Toolkit

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