North Sea Oil Production Down 17% Despite Investment

11 June 2005

Scotsman. UK oil production dropped by 17% year-on-year in March despite large renewed investment in the North Sea.

The decline in production in the face of increased investment is one aspect of peak production, and counters the economists’ stance that increasing investment (spurred by increasing prices) will increase production to offset decline.

But RBS economist Tony Wood said investment in the North Sea had “improved significantly”—a trend he expects to be increasingly robust.

The UK Offshore Operators Association has said that increased spend could half production decline to 7 per cent per year - extending the life of the North Sea. Investment has been put at £4.31 billion for 2005.

So even with increasing investments beyond an annual £4.31 billion (US$7.8 billion), the rate of decline is slowed down to 7% rather than the current 17%.

One effect of enhanced production and more efficient oil removal is accelerating decline, as shown earlier in Oman’s Yibal (earlier post)...and, it seems, now in the North Sea.