Business Outlook 2022

Figure 11: Oil and Gas Production Outlooks Source: NSTA, Offshore Energies UK

250

450

SanctionedProduction

ProductionUnderConsideration

SanctionedProduction

ProductionUnderConsideration

400

200

350

300

150

250

200

100

150

Oil Production (million boe)

Gas Production (million boe)

100

50

50

0

0

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Source:OGA,OGUK

Source:OGA,OGUK

is also the potential opportunity to unlock greater levels of gas through adjustments to the specification requirements for access to the UK gas network. The UK has more stringent gas quality requirements than many other countries and a small adjustment to these specifications could mean that gas that does not meet these standards could be produced with no impact on safety or network performance. OEUK estimates that this could see an uplift in gas production of around 2%/year. Longer-Term Outlook Longer term, by investing responsibly, recognising the changing expectations in the finance landscape and satisfying environmental, social and governance expectations of investors, the domestic industry can play an important role in managing energy import dependence. It is important that governments, regulators and stakeholders maintain focused on delivery along with industry, so that projects may be developed in a timely manner. After some near-term stabilisation, output is expected to return to decline long term. But the rate at which it does so will be

determined by how much is invested in developing new production in the next 12-24 months. It is likely that this rate will exceed the fall in demand, resulting in higher energy imports throughout the middle of the decade, at a time when the country is trying to become more energy-independent. Based on current expectations the annual rate of decline could be about 7%-10%. But in a full investment case, where new greenfield and brownfield projects under consideration are advanced, this decline rate could be reduced – potentially by at least half. On the other hand, if no new investments are unlocked in the short term, the decline could be as high as 15%/year. It should be recognised that the current pipeline of opportunities contains more oil than gas reserves. A focus on new licensing and exploration can help to balance this in the coming years, with a need for a new licensing round to be announced in 2022. There is a conveyor belt of pre-approval projects being matured and OEUK does foresee more new production consents across 2022-23. Projects aiming for development approval could bring up to £3.5bn in new investment and unlock

BUSINESS OUTLOOK 2022

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