January 4, 2016

Oil & Gas UK’s chief executive Deirdre Michie welcomes confirmation of  the first rise in oil and gas production for over 15 years but warns that the  industry will be extremely challenged to sustain this into 2016 and beyond.

Deirdre Michie stated:

“Government data for the first 10 months of 2015 shows that the total volume of oil and gas produced on the UK Continental Shelf (UKCS) was up 8.6 per cent compared with 2014, with the production of liquids up 10.6 per cent and gas up 6.1 per cent.

“Output in November and December tends historically to be more stable, but even so, Oil & Gas UK now expects year end production for the full year of 2015 to be seven to eight per cent higher than last year.”

“Given the difficulties being faced by the industry this is welcome news.  In February 2015 we predicted a marginal increase in production for 2015, but the industry-wide focus on improving production efficiency coupled with investments of more than £50 billion over the last four years to bring new fields on stream across the last twelve months is paying off and yielding a better result.

“The upturn underlines the industry’s commitment to the UKCS – which still holds great promise for the future and is vital for the country’s security of supply. For example, only last week, oil company Taqa announced first production from the Cladhan field north-east of Shetland, estimated to produce 10,000 barrels of oil a day from the UK’s waters.”

Reflecting however on the challenges of producing in a lower for longer oil price world, Deirdre Michie added:

“While the UK offshore oil and gas industry is having to adapt to the low oil price and driving greater efficiencies throughout its operations the fact is that the value of our product has more than halved. Times are really tough for this industry and for the people working in it. We will continue to see job losses as we move into 2016 and we must be thoughtful and supportive of our colleagues and their families who are being made redundant or who are at risk of being made redundant.

“As we go through these times, we have to be resilient and focus on what we need to do to get us through the coming months to ensure an enduring industry for the future.

“Even in these challenging times, we continue to have a supply chain that is the envy of the rest of the world as a centre of excellence for offshore technologies. The supply chain generates tens of billions of pounds in domestic and export sales. It has a workforce with expertise that is unsurpassed globally, and whose skills will be critical in helping us unlock the remaining barrels on the UK Continental Shelf.  With up to 20 billion barrels of oil and gas estimated still to recover, there is good opportunity ahead.”

In 2016, industry will continue to raise its game to ensure it has a globally competitive and efficient base that continues to attract investment. Oil & Gas UK’s industry-lead Efficiency Task Force will lead the drive for greater co-operation across the sector. Having launched The Industry Behaviours Charter as a catalyst for change and the Rapid Efficiency Exchange, an online portal where companies can share common problems and highlight successful solutions, we look forward to shortly highlighting results from a number of other initiatives – including a project from operating companies to share inventories and results of a study into compression systems. In addition, industry is targeting a 50 per cent reduction in drilling costs to ensure the basin remains globally competitive.

Government and HM Treasury will so have an important role to play in delivering regulatory reform and the Treasury’s Driving Investment plan. While we recognise the need to deliver a sustainable industry in the longer term, we also know it is key that work is done by all parties in the short term, to help us steer an effective path through the next couple of years.




Notes to Editors

New production estimates were based on Government statistics and JODI estimates, released late December 2015 and can be found here:

For further information, please contact Helen Evans at [email protected].

Oil & Gas UK is the leading representative organisation for the UK offshore oil and gas industry. Its growing membership, which comprises oil and gas producers and contractor companies, now numbers more than 500.