The latest activity survey from Oil and Gas UK has shown mixed fortunes for the sector in the UK. The statistics show a campaign to improve efficiency and production, and to reduce industry operating costs has been successful.
According to the report, operating costs in the sector have been lowered by a third, costs of exploration are predicted to reduce further and the sector has been boosted by a 10% increase in oil and gas production, but the survey revealed some negative aspects for the industry as well.
North Sea Exploration at record lows
While costs for exploring the North Sea have been reduced by 40%, the survey also demonstrates how exploration is now at record lows.
The lack of surveying in the oil and gas sectors in the UK has caused concern in the past, and a number of initiatives have been announced to encourage more exploration but they do not appear to be reversing the trend.
Lack of Investment
The report also noticed a lack of financing for the creation of new projects, and Oil and Gas UK are now urging the government to take measures to improvement investment levels.
Chief Executive for Gas and Oil UK, Deirdre Michie, has called for action to be taken to encourage government, the gas and oil industries and regulators to work together in order to make the industry more competitive and attractive to investors.
Michie also urged the government to reduce the headline rate of the special taxes paid by the industry and for steps to be made to improve the way the Investment Allowance is used in order to help pave the way for securing energy supply in to the future.
Prices for gas and oil also continue to be on the wane and total revenues have decreased by 30%.
Based on current prices, the activity report highlighted concerns that around half of UKCS oil fields could be operating at a loss, which will further prevent fresh investment into exploration.
Commenting on the falling prices, Deirdre Michie said
“The UKCS is entering a phase of ‘super maturity’. While the industry’s decades of experience provide great depths of knowledge and expertise which can be applied to recover the still significant remaining resource, the report highlights the challenges that the falling oil price poses in our capability to maximise economic recovery of the UK’s offshore oil and gas.”
The report also details the rapid increase in the decommissioning of fields and the fall in sanctioned capital investment