The UK energy industry witnessed a record amount of investment capital in 2013, according to Oil and Gas UK’s 2014 Activity Survey, with a staggering £14.4 billion pumped into the sector.
In the survey, which uses current data to provide a well-informed insight into the market and its future potential, capital investment was found to be up with a significant proportion of the money invested into just four fields.
The rate of investment experienced in 2013 was the highest experienced for over 30 years with plenty of investments already earmarked for the coming year.
According to the report, £39 billion worth of investments have already been approved for the UK with £27 billion of this being used to fund new fields while £12 billion is allocated for spending on existing assets within the industry.
As well as recording positive statistics for overall capital investment in the industry, the survey also suggested production could be on the up.
Although the total production for 2013 was 8% lower than in 2012, with an average of 1.43 million, this was better than the sector had anticipated earlier in the year.
Efforts to improve efficiency have been heralded as potential catalysts behind the improvement with new developments hoped to boost production further over coming years.
Production efficiency, which currently sits at 60%, is also expected to improve over 2014 while new field start-ups and the act of existing fields coming back on-stream should increase production.
All this presents a fairly positive future for the UK’s oil and gas industry, although the Chief Executive of Oil & Gas UK, Malcolm Webb, was quick to point out that there were still challenges to overcome:
“In 2013, capital investment reached an impressive £14.4 billion,” he said.
“Thanks to a number of large projects now underway, investment is likely to remain at about £10 billion until 2015. However, on current projection, overall investment by 2016 and 2017 will fall to half that of 2013. Whilst there are still good projects out there, more are needed.”
A total of 10.7 billion boe are reported as either being in production, under development, or being considered for investment (compared with 11.4 billion boe a year ago). Of these reserves, 9.4 billion boe are reported to have a greater than 50% chance of being recovered compared to 9.9 billion 12 months ago.
The fall of 5% in sanctioned and probable reserves recovery reflects the struggle to increase recovery from existing fields, the difficulty in commercialising new discoveries and poor exploration success in recent years, which continued through 2013.
It is hopeful that the significant, planned investments can act as a catalyst to rejuvenate the UKCS and surrounding oil fields to cement the UK's position within the oil and gas sector.