For the first time in more than 15 years, oil production from the North Sea area is expected to have increased year-over-year.
Given the current state of the oil market, that’s a pretty impressive feat.
Early 2015, the area only expected a very small increase in production, compared to years of declining numbers, even when oil was at its highest…
Worth Every Penny
Oil & Gas UK estimate that North Sea companies produced more than 7% above 2014 levels, for reasons rather similar to the U.S.’s shale producers.
You see, with the falling cost of that oil, drillers had to become more efficient with their equipment, which brought the operating costs in the North Sea down.
What’s more, the industry has seen more than $50 billion in investment in the past 4 years. Much of this investment came when oil prices were much higher, and allowed projects brought online under better circumstances to adapt to the low-price environment.
Between January and October 2015, the UK’s production from the Continental Shelf alone was 8.6% higher than the same period in 2014, and the last two months of the year are expected to contribute stable but decent numbers to the equation.
But Will it Hold?
Unfortunately, even Oil & Gas UK expects that this kind of increased momentum won’t last into the new year.
The market has just become a little too rough, with the price of oil having dropped 70% since mid-2014, hitting lows under $36 in December, 2015.
So all of the UK’s oil supply has been put on sale, which may put a damper on any excitement.
“Times are really tough for this industry and for the people working in it,” admits Deirdre Michie, Cheif Executive of Oil & Gas UK.
However, we believe there’s a lot of potential still for the UK’s oil supply, given the growing push for frac’ing, and the upcoming development of the Weald Basin.
To continue reading about the UK’s latest oil victory, simply click here to read the Wall Street Journal article (May need a subscription to read in full).
Until next time,
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