New Market Report Now Available: United Kingdom Oil & Gas Report Q3 2013
Fast Market Research recommends "United Kingdom Oil & Gas Report Q3 2013" from Business Monitor International, now available
[UKPRwire, Mon Jul 22 2013] The pick-up in drilling activity in the UK's offshore sector will continue on the back of high oil prices and tax reforms that support gas production and development. This will slow the rate of decline, especially in UK gas production, though it will still be insufficient to prevent a rise in its import requirement owing to a policy focus on gas in the country's energy mix. The embrace of shale gas, however, presents upside potential, though it is not likely to make a significant contribution to total gas output within our 10-year forecast period to 2022.
The main trends and developments we highlight in the UK oil and gas sector are:
* Both oil and gas production continued to fall in 2012. Oil output fell below the 1mn barrels per day (b/d) mark to 999,100b/d - the UK's lowest recorded level since the 1970s. The DECC estimates that gas production fell 13.85% y-o-y in 2012.
* Government tax breaks granted in 2012 are paying off as investment returns to the North Sea - the latest major project being Statoil's Mariner heavy oil project. It has also encouraged brownfield investment from Talisman and Shell in mature assets. A rejuvenated UK Continental Shelf (UKCS) is expected to create 40,000-50,000 new jobs, according to energy recruitment firm Oilandgaspeople.com.
* Technical glitches in mature but critical projects such as the Cormorant Alpha platform and the Brent pipeline system are expected to hit output further in 2013 and alongside natural decline, will see the UK's oil output dip below 1mn b/d to 900,900b/d in 2013.
* Although the long-term output trend is a downward one, we forecast that fiscal incentives will see a gentler fall in production as drilling activity picks up; in 2017, we expect output to average at 780,700b/d. By 2022, output could be as low as 710,900b/d based on current rates and volumes of oil discoveries.
* The UK's oil consumption is set to continue on a downward trend, from 1.52mn b/d in 2012 to 1.40mn b/ d in 2017 and 1.30mn b/d by 2022. This is a result of weak economic growth and greater fuel efficiency. It means that the UK will have a smaller domestic market that could further dampen the economics of downstream production. However, this could help alleviate the UK's long-term current account position if it helps contain the country's oil import needs.
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