Key findings from the Oil & Gas Authority’s latest UKCS Production report

Posted by Claxton Marketing Team on 19-Sep-2018 10:30:00

The Oil & Gas Authority’s (OGA’s) latest United Kingdom Continental Shelf (UKCS) product efficiency report has revealed that production efficiency (PE*) has risen for a fifth consecutive year. Various methods, including deployment of new technology and shifts towards efficiency cultures, have contributed to the 1% improvement from the previous year. It may not sound a lot, but to achieve this consecutively over the past five years, and through a downturn, is no mean feat.

UKCS PE 2017

*PE is defined as the total volume of hydrocarbons produced in 2017 as a percentage of economic maximum production potential (Economic Production Efficiency) and is based on guidelines drafted by the Society of Petroleum Engineers (Production Efficiency Reporting – Best Practice Guidelines).

Rise of UKCS PE

This blog outlines Claxton’s key findings from the report and how increased PE is having a positive influence on the industry and our business.

2017 UKCS PRODUCTION EFFICIENCY OVERVIEW

The report outlined that the UKCS production potential in 2017 was 800 million barrel of oil equivalent (BOE), which was a slight increase on 2016. The recent appetite for exploration in the North Sea has seen several new fields come on line which has compensated for the decline of maturing fields, resulting in an additional 12 million boe, or 32,000 barrels, of production a day compared to the previous year.

Production losses were analysed in detail and broken down into four categories; well, plant, export and market. The data showed that not all loss categories had fallen uniformly.

UKCS production losses

Although there is no year on year trend in terms of subcategory losses in wells, the data showed that the across the UKCS, well losses fell by 11% after a significant rise in 2016. Plant losses fell by 5% in 2017, playing a major part in the overall improved efficiency. Although export losses grew in 2017, overall composition losses changed, with planned and unplanned terminal losses down, pipeline losses being the largest contributor.

The composition and total volume of production losses has changed and improved significantly since the efficiency low point of 2012. The reduction in plant losses has greatly contributed to overall improvements in PE.

When broken down into regional production efficiency, the report showed that three out of five regions in the UKCS have seen improvements since the previous year. The Southern North Sea saw the greatest increase of seven percentage points, which was a recovery from a drop in 2016. Opportunities for PE improvement were identified in the East Irish Sea, which suffered last year due to export losses.

looking at the bigger picture

The report outlined that whilst PE is a measure of efficiency, the ultimate goal is to maximise value. This meant that cost must also be considered alongside efficiency.

The unit operating cost (UOC) of the UKCS highlights the potential value by combining production and cost. It was noted that the other aspect to consider when looking at profit was the oil price. The UOC of the UKCS fell rapidly in response to the recent price downturn, whilst at the same time PE was improving. The graph shows that PE has improved over the same period of which oil price has declined.

UKCS PE against oil price

looking to the future

The report concluded by summarising the strategies and best practices which have contributed to increased PE and how further improvements can be made in the future.

New technology is something which continues to drive improvements. It was proven that new technology, increased use of existing data and creating a culture of efficiency were all widely applicable factors for the PE improvement across the UKCS.

The report found that new technologies are actively being pioneered in the UKCS through the use of light weight intervention vessels on subsea wells. It was noted that in 2016 the worlds first subsea intervention using coiled tubing was carried out and another world first was achieved the following year with the use of coiled-hose on a subsea well. These innovations have provided operators with low cost alternatives for reducing well loses.

Whilst operators work tirelessly to embed a safety culture within their organisations, it has come to light that simultaneously ensuring an efficiency culture brings great benefits. The OGA highlighted that some practical examples shown in the UKCS include: informing employees of the total value of production losses each day; and senior management team talks emphasising the importance of true amplitude recovery (TAR) efficiency on the businesses success before each shift changeout during a TAR. What’s more, the industry has learned from other sectors. For example, the implementation of integrated operation centres (IOCs), as seen in the airline industry.

Lessons learned from these types of innovations and implementation of best practices should influence and help continue the rise of PE over the coming years.

in conclusion

What does this report mean for Claxton? We see the slight but steady increase in PE as positive news for all our product streams and services. Of course, we service clients across the globe, but the UKCS has been a major region of work for Claxton for over three decades. We understand that operators are under increasing pressure to drive down inefficiencies, which is where Claxton’s full-service offerings come into play. Claxton provides a full project management service combined with bespoke operational planning and design and a multi-skilled workforce to achieve both cost and time savings for clients. This complete package is available across our full portfolio, which includes risers and structures, and is an example of how we help operators maintain operation efficiency.

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Resources:

The original report: https://www.ogauthority.co.uk/media/4967/ukcs-production-efficiency-2018.pdf

Wider tools, information and case studies are available on the subject of efficiency through the Oil & Gas UK Efficiency hub: https://oilandgasuk.co.uk/efficiencyhub/

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