A number of sources (DECC, BP, this report) point to UK proved oil and gas reserves to be of the order 4.5 billion barrels of oil equivalent (boe) at the end of 2012. On current trajectory this will be mainly produced by the end of this decade and the North Sea party will be over. That is unless urgent action is taken to stem the decline and to prolong the life of ageing infrastructure. (DECC = UK government Department of Energy and Climate Change).
Figure 1 UK oil production history based on data published by BP statistical review of world energy 2013. See Figure 3 for an explanation of the numbers. THIS IS NOT A FORECAST but a scenario of what may come to pass without urgent and serious intervention.
Figure 2 UK gas production history based on data published by BP 2013. See Figure 4 for an explanation of the numbers. THIS IS NOT A FORECAST but a scenario of what may come to pass without urgent and serious intervention.
It is against this backdrop that the UK government asked Sir Ian Wood to conduct a review of North Sea oil and gas production with a view to making recommendations on how to maximise economic recovery. I was asked by The Conversation (a UK academic newsletter) to write an article on Sir Ian’s interim report. The report says:
At the low end, the Review believes the recommendations in this report have the potential to deliver at least 3-4 billion boe more than would otherwise be recovered, worth approximately £200 billion to the UK’s economy at today’s prices…
and I wanted to examine what the phrase “otherwise be recovered” actually meant. Hence, this short post on UK oil and gas reserves is a stepping stone en route to my article for The Conversation that should appear in a few days.
Sir Ian also says…
Some 41 billion barrels of oil equivalent (boe) have already been produced from the United Kingdom Continental Shelf (UKCS) and it is estimated that a further 12 to 24 billion boe could be produced
…but the report does not provide evidence or a source for the latter claim. Following a very large number of emails I have not managed to ascertain what “3 to 4 billion more” actually means and leave it to The Review Team to be much more specific on this point in their final report.
Defining and estimating reserves and production forecasting is a bit of a black art. In 2006 I made this forecast for UK oil production, with 1.003 mmbpd forecast in 2012. This compares with 0.967 mmbpd that actually came to pass. This is astonishing accuracy for a 6 year forecast!
The best way to forecast is so called bottom up, where you add up all the fields and discoveries that you know about. Right now I don’t have that data to hand, or the time to find it and so resort to a cheap and cheerful technique called Hubbert Linearisation (HL). This form of decline model is actually employed by the oil industry to estimate future performance based on production history. In essence, it fits a logistic curve to production data to provide an estimate for ultimate recovery (EUR). It needs to be stressed that what I present here (Figures 3 and 4) is NOT A FORECAST but a scenario that may come to pass if nothing is done to alter the current trajectory – enter Sir Ian Wood.
Figure 3 Hubbert linearisation for UK oil production using the crude+condensate+natural gas liquids (C+C+NGL) published by BP 2013. The decline curve since 1994 points to an EUR of 30 billion barrels. With 27.5 billion barrels already produced that leaves 2.5 billion barrels of oil remaining. This is what may come to pass without intervention that may turn the trend to point towards a higher EUR.
Figure 4 Hubbert Linearisation for UK gas production using data published by BP 2013. The decline curve since 2000 points towards an EUR of about 18 billion barrels oil equivalent (boe). With 16.1 billion boe already produced that leaves 1.9 billion boe of natural gas remaining. 1 billion cubic meters (bcm) of natural gas = 6.6 million barrels of oil (BP). This is what may come to pass without intervention that may turn the trend to point towards a higher EUR.
Comparison with official sources
Figure 5 Published estimates for UK oil and gas reserves in billion boe. I have been advised that the 7.4 billion boe figure quoted by Oil and Gas UK includes some of the probable category. The definition of reserves by the Society of Petroleum Engineers (SPE) is given here.
The combined gas and oil figures produced here are closely aligned with the proven reserves reported by DECC and BP. Industry representative Oil and Gas UK’s figures are an outlier. In email, they advise that their figures are based on an annual survey of their members who are the oil and gas companies operating in the UK North Sea.
This will form the starting point for my discussion of Sir Ian’s review. Without intervention the UK may produce a further 4.5 billion boe of oil and gas. With implementation of the recommendations made by Sir Ian, this figure may grow by 3 to 4 billion, effectively capturing DECC’s probable reserves category.
DECC have published monthly oil and gas production data to the end of August 2013. Offshore plus onshore oil production is running at 789,650 bpd (2012 967,000) and gas production (dry gas and oil associated gas) is running at 778,000 boepd (2012 741,000). The 8 month production figures for 2013 are biased low since they are unduly impacted by summer maintenance. And I am also comparing DECC (2013) with BP (2012) data that may be subject to different reporting standards. The Jasmine gas field, with capacity of 140,000 boepd, has recently started production. And with Elgin and Franklin both back on line (well kind of) the UK indigenous gas situation seems better this year than last. Oil production seems well below last year’s level.