The Architecture of UK Oil Production in Relation to Production Forecasts
With increasing levels of global oil consumption, the significance of predicting realistic future oil supplies becomes ever more important. With reference to UK demand and supply, this has a critical bearing as it has become a net oil importer recently. For the Talking Point in this issue, Euan Mearns (euan.mearns@btinternet.com), an independent North Sea oil industry researcher, investigates the future oil production trends for the UK and poses a few questions. Euan worked as a researcher at the University of Oslo and the Institute of Energy Technology, Oslo, between 1983 and 1991. In 1991 he founded Isotopic Analytical Services Ltd and worked there until 2004. Since then he has been conducting independent research in energy security issues. What is your view on this article? Please use the feedback box at the end to provide your comments.
UK Perspective
Forecasting future oil and gas production at field, national and global scales has taken on new significance in recent years. The world has moved from a position of large surplus energy production capacity to a position where production is only just meeting demand. At times of surplus, forecasting future supply is less critical than at times of shortage – surplus being easier to handle than deficit.
Forecasting UK oil production has recently taken on a particular importance. During 2006 the UK has once again become a net importer of oil, having benefited from net oil exports since 1980. Some key questions are, therefore:
- Are UK oil imports a temporary blip or are they here to stay?
- If they are here to stay, how much oil will the UK have to import and at what cost?
- Where will UK oil imports come from and how secure are these import supplies?
Forecasting UK oil production is not as straightforward as one may think and there is significant variance between published forecasts (see later).
UK Production History and Structure
UK North Sea oil production has peaked twice. Figure 1 shows the stacked production for UK oil fields developed up to 1999 (the year of the second peak in production).
Figure 1: UK oil production from offshore fields developed up to 1999
Note that at the time of the first production peak in 1985, only 32 fields were producing whereas by the time of the second peak in 1999, 136 fields were producing. The oil price crash of 1986; Piper Alpha in 1988 and the subsequent fitting of safety equipment to a number of fields were responsible for the valley between the peaks.
Fields developed since 1999 are not shown in Figure 1 in order to illustrate the high underlying decline (depletion) rate of 13% per annum in the absence of the newer field developments.
Figure 2: UK oil production from fields developed since 1999
Figure 2 shows the stacked production from the 48 new fields that have been developed since 1999. Among these new developments, the larger fields like Shearwater, Elgin and Franklin, are gas condensate fields where liquids production started to decline within a few years of start up owing to pressure depletion. Also, many of the smaller fields have short life spans. Production from these new fields peaked at 500,000 bpd in 2003/04.
Figure 3: UK oil production from fields developed up to 2005
The 48 newer fields are shown as a single dark wedge in Figure 3 where they are stacked on the fields shown in Figure 1. These 48 newer fields reduce the decline to an average rate of 7.6% per annum. Note the shoulder on the decline curve brought about by significant new production in 2002 principally from Shearwater, Elgin, and Franklin. Production from Buzzard is expected to produce a similar shoulder on the decline curve during 2007.
Figure 4: UK Oil Production from Future Fields Developments
Figure 4 shows future new major field developments from a database provided by Rembrandt Koppelaar, President of ASPO Netherlands. The Rosebank–Lochnager field is not expected to come on before 2010, so this forecast may be over-optimistic. However, the delay in Rosebank may be partly offset by a larger number of small fields developed on the back of high oil prices.
UK Production Forecast Models
A production forecast model labelled Mearns2 (dark blue line) is shown in Figure 5. This was produced by stacking the future new fields shown in Figure 4 on top of the 13% per annum underlying decline curve. Note the shoulder in 2007 is attributed to Buzzard production.
Figure 5: UK oil production forecasts
Figure 6 shows a comparison between Mearns2 prediction and other production forecasts produced by Professor Alex Kemp and DTI. The Mearns2 prediction lies closest to the lower DTI forecast while the Kemp forecast lies closer to the upper DTI forecast.
Figure 6: Comparison of various forecast models
The dashed red line in Figure 6 shows approximate UK oil consumption of 1.75 million bpd. The Mearns2 and the lower DTI forecasts, therefore, show the UK being a permanent oil importer while Kemp and the upper DTI forecast show UK self sufficiency in oil until 2010. These indicate two very different outcomes for future UK oil security and balance of trade.
Conclusions
The DTI should closely monitor UK oil production in relation to forecast models. If production data points to the more pessimistic models being correct then the prospect of ever-increasing oil imports needs to be built into strategic planning.
The UK, along with most OECD countries, wastes vast amounts of liquid fossil fuel. More rigorous energy conservation measures may benefit both UK energy security and CO2 emissions. Proper planning for energy conservation may pave the way for continued economic growth whilst using less energy. The chaos imposed by energy shortages, on the other hand, may threaten future economic prosperity.
This article is an abridged version of a post that appeared on The Oil Drum in November 2006.