Catcher - 'major' new North Sea Oil field in context

Numerous news sources are busy celebrating the planned development of the new Catcher oil field in the North Sea. But few of them put it in context, with even the BBC describing it as "a major North Sea field", saying it could ultimately produce 100 million barrels of oil, and other sources mention a peak production of 50,000 barrels per day. These sound like big numbers, but let's compare to the real major oil field of the North Sea - Forties.

Forties is expected to produce over 4 billion barrels during its operational lifetime, and reached a peak output of  520,000 barrels per day in 1978. So that's forty times bigger than the Catcher field, and ten times the peak output. Catcher doesn't look so big now, does it?

Let's also compare it to our current oil production: 925,000 barrels per day, and our oil consumption of 1.5 million barrels per day. So it's basically going to produce 3.3% of our national consumption. Great, that'll make a huge difference... not.

Peak oil is still alive and well, and the IEA's recent report showed that over 80% of investment in energy oil and gas is just to make up for declining production from existing fields. So don't expect to see cheaper petrol or diesel any time soon. Or ever, in fact.


Image: "PlatformHolly" by employee of the U.S. government: public domain - http://www.netl.doe.gov/technologies/oil-gas/Petroleum/projects/EP/ResChar/15127Venoco.htm -- U.S. Department of Energy. Licensed under Public domain via Wikimedia Commons.

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North Sea faces record fall in oil and gas production

According to a story in The Telegraph today, this year could see a record fall in oil and gas production for the UK:

North Sea oil and gas production could decline by as much as 22pc this year - the biggest annual slump on record – as maintenance on ageing infrastructure hits operations, the industry body has warned. Oil & Gas UK said it now expected average output to fall to between 1.2m and 1.4m barrels of oil and gas per day (boepd) this year, down from 1.54m boepd in 2012.
Full story

The decline has been in the region of 10% a year for some time now anyway, but some major technical issues in the past year have pushed production down faster than has been typical. In some ways this isn't all bad - it means that oil and gas is still there to use later on, when prices are higher. But there's always the risk that it's not worth repairing failing machinery if there's not much left to be extracted from a particular field, leaving it locked underground for good. (Of course, from a climate change point of view that's a good thing!)

This trend doesn't fully show up in the latest DECC Energy Trends, as it only covered up to Q1 2013, but even then oil production was down 15% from a year ago, and gas down 14.5%. It'll be interesting to see what's in the September edition...

On a slightly more positive note, it seems that more attention is being paid to thorium as a nuclear fuel. Obviously nuclear energy of any sort has numerous downsides, but thorium does seem to be be 'less bad' than uranium in several ways, so it'll be interesting to watch for more developments...

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The good news and the bad news on UK oil production

A story on BBC news this morning covered a press release from Oil and Gas UK, which is a body representing the companies working in the North Sea. Given that, it's unsurprising that they have some 'good news':

Following the introduction of tax changes designed to encourage growth in the UK oil and gas sector, the industry has responded with the highest investment for more than thirty years.
...
a significant upturn can now be predicted over the next three to four years, rising to approximately two million boe per day by 2017

However, they do acknowledge the reality of where we are right now:

Production fell to 1.55 million boe per day in 2012, down by 14 per cent from 2011 and by 30 per cent from 2010.
...
production may fall again slightly this year to 1.45 – 1.5 million boe per day...

I'm personally not convinced that production will actually rise as they they think, because we seem to have 'one off' factors that affect production every year, and as they are due to ageing infrastructure I see no reason for the next few years to be any different. Even if production does climb as they forecast by 2017, it will still by less than the figure in 2010.

The answer? Obvious really - we have to use less oil and gas, or else face paying a very high price for it.

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Shrinking size of UK oil and gas fields

I just came across this graph on page 110 of the 2012 Digest of UK Energy Statistics (internet content) from DECC, showing the size of new UK oil and gas fields coming into production in the UK over the past 55 years. Speaks for itself really...

Page 2 of the Long Term Trends section of DUKES has this cheery paragraph too:

Trends in the production of primary fuels in the United Kingdom are illustrated in Chart 1.1.2. In 2011, total energy production was 137 million tonnes of oil equivalent, an increase of 24 per cent on production in 1970, but down by a record 13.2 per cent on 2010. Total energy production has fallen in each of the last 12 years since it peaked in 1999. In the last ten years, UK energy production has declined at a rate of 6.8 per cent per year; within this natural gas production has declined at the fastest rate, down 8.1 per cent per year, followed by petroleum down 7.8 per cent, coal down 5.3 per cent with primary electricity down 1.9 per cent per year. Bioenergy and waste has grown by an average 8.5 per cent per year over this same time period, though in 2011 accounted for only 4.2 per cent of the UK’s energy production.

Can't help thinking that the growing energy import bill must be having a growing impact on the economy, but it doesn't seem to make the headlines very often...

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UK oil output drops 16% in a year

The Telegraph reports:

Britain's oil production from the North Sea has fallen by 16pc since last year in a drastic drop that will cost the Treasury millions of pounds in lost taxes. Officials from the Department for Energy and Climate Change put the unexpectedly large fall down to "maintenance and other production issues" on top of the long-term trend of declining output.
...
The Health and Safety Executive has warned that only one in 30 of the UK's North Sea oil rigs is in a good condition. A number of large platforms have closed for major maintenance this year. Full story

So on top of a declining natural resource, we've got a creaking and rusting and infrastructure... Doesn't bode well for energy security, or for the UK balance of payments...

Mike

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Why UK oil and gas production will keep falling fast

In this post I'm going to show you a few graphs from a UK government department, and explain what they mean for future UK oil and gas production.

The Department of Energy and Climate Change has recently published the 2011 Digest of UK Energy Statistics (DUKES), which is a fairly lengthy document. Of particular interest is the 'internet booklet' version, which includes the graphs I'll show you in a moment. A bit of background first...

When an oil or gas field is discovered and developed, production initially rises, then reaches a peak, and finally falls away. The rate at which production falls tends to drop over time, so you end up with a 'long tail' of low production that can carry on for many years - or until the field's owner decides it is no longer generating enough income to be worth maintaining. However, this pattern has changed in the past couple of decades, as explained by this quote from the DUKES internet booklet:

It can be seen from the production chart that during the 2000s the amount of oil produced from older established fields was in general decline. It is also noticeable that the decline in post 1994 developments is greater than in earlier developments. This is because later technology meant crude oil could be extracted at a relatively greater rate leading to a quicker exhaustion of the reserves. In 2010, these newer (post 1994) fields accounted for 69 per cent of the UK’s oil production.

Here's the chart it is referring to, showing oil production, with fields grouped by the year they started production (all charts can be clicked to view a larger version):

The older fields had new technology applied as it became available, maintaining steady but lower production over longer periods of time, but the newer fields have had all the advanced technology applied very quickly (to make money faster), and as a result the production rises quickly, but also falls quickly once peak production is passed. This has allowed the rather small oil fields discovered in the past couple of decades to offset the slow decline from the much larger, older fields, but now that some of them are declining, and declining fast, there is really nowhere left to turn other than importing oil (the UK has been a net importer since 2005). The following chart shows the same data, but as percentage share of total production:

As you can see, the majority of our oil production is now from recently developed smaller fields, which experience shows us will decline quickly - so we've got quite a long way to fall before we bottom out on the 'long tail' of oil production which we can reasonably count on for a longer period.

And just to complete the picture, here's the same graphs for gas fields (bear in mind that in 2010 over 40% of our electricity was generated by burning gas...):

Ever played a game of Snakes and Ladders? I think the UK is half way down a snake...

Mike

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North Sea cavern could double UK gas stockpiles

According to a story in the Telegraph, the Italian oil company Eni has been given permission to develop a gas storage facility in the North Sea. At about 4.6 billion cubic metres, it will roughly double the UK's gas storage capacity.

This is exactly the kind of thing we need as the North Sea gas output continues to plummet year after year, but it's worth bearing in mind that:

• Eni might not be in a hurry to develop it, given the economic situation.
• If it goes ahead, it still won't be ready until 2015, by which time our indigenous gas production will have fallen another 20% or so.
• If it goes ahead, we still have to import the gas, which assumes that there is enough available in the market, and that we can afford it.
• If it goes ahead, it will still only give us 20 days supply of peak winter demand.

So, what we really need to be doing is insulating our homes, turning down the thermostats and switching to non-fossil-fuel forms of heat. This is what I've done in my own house, installing cavity wall insulation, loft insulation, a woodburner and solar water heating.

Mike

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