North Sea Resilient to Oil Slump

North Sea Resilient to Oil SlumpNorth Sea Resilient to Oil Slump

Oil producers in the North Sea were supposed to be among the first victims of a global battle for market share. Instead their high-cost, decades-old facilities are proving surprisingly resilient to the price slump.

Crude oil and condensate output is likely to continue rising in the UK North Sea until 2018 as projects that were sanctioned before crude’s plunge four years ago start up, according to estimates by industry consultant Wood Mackenzie Ltd, Bloomberg reported.

Even though production dips after that, output by the end of the decade will still be roughly equal to the 2015 level.

“Production has stayed resilient,” said Ian Thom, an Edinburgh-based senior research manager for UK upstream at Wood Mackenzie. “We saw a record number of dollars invested in the high-oil price environment,” and that is still delivering new production.

Production of crude and condensate, a type of light oil, will top 1 million barrels a day in the UK North Sea this year, about 8% higher than last year, according to Wood Mackenzie.

Output will reach 1.07 million barrels a day in 2017 and 1.11 million the next year before falling to about 956,000 barrels at the end of the decade.

Companies are “working on cost efficiency reductions which seems to be going fairly well” in the North Sea, said Philipp Chladek, a senior industry analyst for Bloomberg Intelligence in London.