10 must-know facts from the Oil & Gas UK Economic Report 2014

Posted by Jamie Hall on 24-Oct-2014 16:25:00


Described as the "definitive guide to the current health and future prospects of the offshore oil and gas industry in the UK", the Economic Report by Oil & Gas UK has given fascinating insights into the sector's future.

Based on 2013 stats, when the UK and global economy were sneaking out of a recession, the report shows that there is much to do on the investment front on the UKCS, but the stimulation from the fiscal regime is helping to aid recovery in the sector.

For those who need a quick summary of the report by Oil & Gas UK, here's the top 10 must-know facts from the report...

1 - 70% of energy to UK was oil and gas

Oil and gas was the primary energy supplier to the UK with oil for transport and gas for heating being dominant in these markets. It is expected that this figure will remain the same until 2030.

2 - £30 bn contributed to the economy

Oil and gas production boosted the balance of payments by £30 bn with offshore oil and gas remaining as the largest investing sector and largest contributor to national GVA among the industrial sectors of the economy.

3 - 8% decline in production recorded

In 12 months, production declined to 524 million boe, or 1.44 million boe per day. Despite this, the UK remained in the top 25 producers of both oil and gas globally, as well as being ranked second largest producer of oil in Europe to Norway and third largest producer of gas after Norway and Netherlands.

4 - £26 billion spent in UKCS expenditure

Total expenditure rose by over 20% to almost £26 bn with capital investment accounting for more than half of the increase. Since 1970, the industry has spent upwards of £525 bn on exploration. In 2013 drilling and field development accounted for £330 million, the largest collaborative expenditure last year.

5 - 15.5% rise in operating costs expenditure

Total operating expenditure rose to £8.9 bn with unit operating costs continuing to rise to an average £17 per boe. The number of fields with a UOC greater than £30 doubled during the year.

6 - 43 bn boe recovered from UKCS

43 bn boe of oil and gas have been recovered from the UKCS since recovery began. Further overall recovery is forecast to be between 15-24 bn boe. Taking into consideration the current investment plans, new projects have the ability to deliver 10.7 bn boe.

7 - £14.4 bn spent on capital investment

Capital investment was the highest ever recorded, with Oil & Gas UK expecting costs to remain above £10 bn in 2014. Total investment committed to new field developments and brownfield projects swelled to £39 bn.

8 - 13 new fields come on-stream

13 new fields came on-stream in 2013 bringing 392 million boe into production. The DECC (Department for Energy and Climate Change) approved 10 new fields, which could yield over 460 million boe over time, as well as 26 brownfield projects.

9 - 120 development wells created

Drilling activity increased with 120 development wells, 29 appraisal wells, and 15 exploration wells completed. Although 20 of these were abandoned due to security and finance, 80 million boe of recoverable resources were discovered.

10 - 450,000 jobs supported by industry

Highly skilled and well paid, the industry supported 450,000 jobs which includes 200,000 in the supply chain and 112,000 in jobs induced by the economic activity created by the industry. 36,000 were employed by operating companies directly.

Future for UKCS

As the Economic Report reveals, there is a growing need for further exploration in the UKCS to find new resources to tap into, in a market where the country's presence, and ROI compared to 10 year ago, has shrunk globally.

Oil & Gas UK sees the need for action on 3 levels: more radical tax changes, full implementation of the Wood report, and the industry collaborating to reduce the costs and inefficiencies that are now challenging the production of oil and gas in the UK.

For those who are tempted into reading the full report, click here. For those within the industry, share your thoughts on the Economic Report on the blog below.

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