Business Outlook 2018

5.1 Production

1

UKCS production in 2017 was equal to that of 2016 at 598 million boe or 1.64 million boe per day (boepd), a continuation of the recent strong production performance on the UKCS.

Despite some start-up delays and challenges with new fields, a small production increase in 2017 was anticipated until the unexpected closure of the Forties Pipeline System (FPS) due to a technical issue in the last few weeks of the year. This led to a dip in production in December and a flat outturn for the year. This key piece of infrastructure carries around 40 per cent of total UKCS liquids production and is essential for over 20 per cent of UKCS gas production. Moreover, the system closure highlighted the importance of the oil and gas industry to the UK economy, with total domestic month-on-month industrial output falling by 1.3 per cent in December 2017, driven mainly by the FPS outage 5 .

2

3

Figure 16: Monthly Production

4

60

50

5

40

6

30

2014

2015

20

7

2016

2017

Production (Million boe)

10

8

0

Jan Feb Mar

Apr

May Jun Jul

Aug Sep Oct

Nov Dec

9

Source: OGA

Since 2014, production has increased by 16 per cent, reversing a 14-year declining trend. This improvement has been driven by a wave of new project start-ups and efforts to improve production efficiency 6 across the basin.

10

Over the past five years, the UKCS has seen production efficiency increase from 60 per cent in 2012 to 73 per cent in 2016, with further improvements expected for 2017. This basin-wide shift increased production by around 80 million boe between 2012-16, with the two-percentage point increase between 2015-16 contributing 33,000 boepd; equivalent to the output from the seventh largest producing field on the UKCS. These recent gains have been largely driven by continued reduction in plant-related losses, with improved compression system efficiency a key contributor 7 . 5 See http://bit.ly/IndexofProduction 6 Production efficiency is the total annual production divided by maximum production potential of an asset. 7 Guidelines to Maximise Compression System Efficiency are available to download at http://bit.ly/CompressionGuidelines

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