The sharp decline in production of oil and gas from under British waters is “worrying” industry leaders, according to Oil and Gas UK. The trade body says there is record investment this year of £13.5bn, but its annual report on the industry’s economic impact highlights the sharp fall in output of 19% during 2011 and 14% in 2012.
According to the body, the industry’s most recent estimates of the continuing decline suggest an even further fall of at least 8.5% during this year. This will also be partnered with no recovery next year.
Oil and Gas UK advise that only from 2015 should the current high level of investment begin to have an impact on raising output. However, it warns that the level of investment will fall from £13.5bn this year to between £8bn and £10bn from 2015.
The annual report also raises concerns the cost of extracting the average barrel of oil is rising rapidly.
The proportion extracted of each potential barrel of oil or its gas equivalent fell to 60% last year. Only seven years ago, the production efficiency rate was above 80%, according to the report.
Because of challenging geology and unplanned shutdowns on offshore platforms, the unit cost per barrel for extracting oil from British waters, known as the UK Continental Shelf, has gone up four-fold over the past decade.
This is described by UK Oil and Gas as “a worrying trend that could have a major influence on the longevity of the UK Continental Shelf”.
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