First Production Increase in Fifteen Years for U.K. Offshore Sector

Industry association Oil & Gas U.K. has announced government data showing U.K. Continental Shelf oil and gas production up nearly eight percent year over year, led by liquids production, for the first increase in a decade and a half. Output has fallen steadily over the past fifteen years with a total decline of over 70 percent from turn-of-the-century highs.

For the first ten months of 2015, the new data show production increasing by over 10 percent.

“In February 2015 we predicted a marginal increase in production for 2015, but . . . investment of more than £50 billion over the last four years . . .  is paying off and yielding a better result,” said CEO Dierdre Michie. “Only last week, oil company Taqa announced first production from the Cladhan field north-east of Shetland, estimated to produce 10,000 barrels of oil a day from the UK’s waters.”

But things will not be easy going forward. “The value of our product has more than halved,” she said, and “we will continue to see job losses as we move into 2016.” But in the long term, “with up to 20 billion barrels of oil and gas estimated still to recover, there is good opportunity ahead.”

In December, chairman of U.K. energy firm OGN Dennis Clark said that the U.K. oil industry – which has already taken a tremendous hit since crude futures began to slide last year – could disappear with sub-$40 crude and a tax structure favoring other localities. As of September, the BBC reported that the country's oil and gas sector had lost about 65,000 jobs. Worldwide, the losses are said to total in the range of 250,000.

A recently released government report suggested that the Scottish economy as a whole slid into contraction during November. The negative growth was led by manufacturers, which reported that their business had taken a hit from shrinking orders by oil and gas firms as drilling activity subsides.

U.K. gas production suffered a hit in December with a line rupture on the Brae Alpha platform offshore Scotland. The Marathon Oil-operated rig did not suffer a fire, and crew were able to stay on the facility.