Economic Report 2018

ECONOMIC REPORT 2018

4.2 Adding a Generation of Productive Life to the Basin If no intervention was to be made, production could be expected to fall to around 0.5 million boepd in 2035, greatly reducing the significance of UKCS production in terms of its contribution to the UK economy and its energy supply. Success in delivering the Vision will see daily production levels of at least 1 million boe in 2035, with the UKCS remaining a significant energy provider to the UK. Delivering the potential volumes identified in the Vision will generate an additional £140 billion of revenue by 2035, on top of a baseline of £280 billion, resulting in a total of £420 billion of value across the period.

Figure 16: UKCS Baseline and Vision Production Scenarios

1.8

1.6

1.4

1.2

1.0

0.8

Vision Scenario

0.6

Baseline Scenario

0.4

OGA Central estimate (2016)

Production (Million boe per Day)

0.2

OGA Central estimate (2018)

0.0

2015

2020

2025

2030

2035

Source: OGA

Achieving this production goal will mean effectively managing the rate of production decline through to 2035 and beyond, ensuring that it does not exceed 3-4 per cent per year over the timeframe. The long-term decline rate since 2000 has been around 7 per cent per year, illustrating the challenge facing the industry. If there are years where the decline rate is higher, this will need to be offset by ensuring that the decline rate is even lower – or that production increases – in other years. Delivering the Vision for the UKCS can only be achieved by fully implementing all aspects of the Maximising Economic Recovery strategy. Success will result in a total of around 10 billion boe being produced from the UKCS between now and 2035, representing an additional 3 billion boe of recovery above baseline forecasts. This emphasises the important role that exploration and increased reserves recovery will need to play in the future success of the basin. While the initial signs are promising, the longer-term production trend is less certain. As outlined in section 3.6, production increased by 16 per cent between 2014-17 and could have increased by as much as 20 per cent by the end of 2018. Whilst production is expected to remain strong through 2019, the lack of new project approvals means it is almost certain that the basin will return to a position of production decline post-2020.

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