NORTH Sea oil and gas firms made progress on key measures amid challenging conditions last year but more sharp cuts in investment in the area are looming, the sector regulator has found.
2020 was a tough year for the North Sea supply chain as firms that operate oil and gas fields slashed spending in response to the fall in demand that accompanied the imposition of lockdowns around the world.
However, the Oil and Gas Authority said the results of a survey it completed showed performance on the United Kingdom Continental Shelf had remained positive in 2020, with some improvements from the previous year.
READ MORE: BP boss insists world will need oil and gas for decades amid net zero drive
The OGA noted that production efficiency had remained at 80 per cent, in line with its target.
Carbon dioxide emissions from offshore installations and terminals were reduced by 10 per cent while the amount of gas flared fell by 20%.
The average costs of production fell to £11.1 per barrel down £1/bbl on the preceding year.
Industry leaders have made the reduction of average operating costs a key focus of their efforts to help ensure the North Sea can compete for investment with other areas.
The OGA said: “Recent discoveries in the UKCS particularly in the Central North Sea have been high in volume, indicating the quality that the basin still offers and highlighting the need for energy transition-conscious exploration.”
However, exploration activity slumped last year as firms cut discretionary spending. The OGA noted only seven exploration wells were drilled, the lowest total for eight years.
READ MORE: US oil giant sells bumper North Sea portfolio as shake-up in area continues
Capital expenditure in the basin over the next five years is forecast to drop by £2.9 billion.
Scott Robertson, director of operations at the OGA, noted a lot of activity was delayed or deferred last year due to the impact of the combination of Covid-19 restrictions and low oil and gas prices.
He said that in the year ahead it would be important for firms to maintain high levels of performance as activity ramped up, “both in traditional oil and gas activity as well as the net zero and energy transition opportunities our basin offers”.
READ MORE: North Sea oil firms to develop fields as oil price rises above pre-crisis levels
The OGA said the fall in operating costs reflected the impact of the pandemic. Costs are forecast to rebound in the next few years.
The production efficiency measure compares the total output achieved with the level thought to be possible.
Why are you making commenting on The Herald only available to subscribers?
It should have been a safe space for informed debate, somewhere for readers to discuss issues around the biggest stories of the day, but all too often the below the line comments on most websites have become bogged down by off-topic discussions and abuse.
heraldscotland.com is tackling this problem by allowing only subscribers to comment.
We are doing this to improve the experience for our loyal readers and we believe it will reduce the ability of trolls and troublemakers, who occasionally find their way onto our site, to abuse our journalists and readers. We also hope it will help the comments section fulfil its promise as a part of Scotland's conversation with itself.
We are lucky at The Herald. We are read by an informed, educated readership who can add their knowledge and insights to our stories.
That is invaluable.
We are making the subscriber-only change to support our valued readers, who tell us they don't want the site cluttered up with irrelevant comments, untruths and abuse.
In the past, the journalist’s job was to collect and distribute information to the audience. Technology means that readers can shape a discussion. We look forward to hearing from you on heraldscotland.com
Comments & Moderation
Readers’ comments: You are personally liable for the content of any comments you upload to this website, so please act responsibly. We do not pre-moderate or monitor readers’ comments appearing on our websites, but we do post-moderate in response to complaints we receive or otherwise when a potential problem comes to our attention. You can make a complaint by using the ‘report this post’ link . We may then apply our discretion under the user terms to amend or delete comments.
Post moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours.
Read the rules here