United Kingdom oil production 1975-2012 (data from DECC)Petroleum production and consumption in the United Kingdom Natural gas production and consumption in the United Kingdom
The produced 1.42 million boepd in 2014, of which 59% was oil/liquids. In 2013 the UK consumed 1.508 million bpd of oil and 2.735tcf of gas, so is now an importer of hydrocarbons having been a significant exporter in the 1980s and 1990s.
98% of production comes from offshore fields and the services industry in Aberdeen has been a leader in developing technology for hydrocarbon extraction offshore. Historically most gas came from Morecambe Bay and the Southern North Sea off East Anglia, but both areas are now in decline. Oil comes mainly from the North Sea Central Graben close to the median line with Norway in two main clusters - around the Forties oilfield east of Aberdeen and the Brent oilfield east of Shetland. There have been recent discoveries in challenging conditions west of Shetland. As of 2012 there were 15, 729 kilometres (9, 774 mi)of pipelines linking 113 oil installations and 189 gas installations. The only major onshore field is Wytch Farm in Dorset but there are a handful oil wells scattered across England. There is significant shale potential in the Weald and in the Bowland Shale under Lancashire & Yorkshire, but only a few wells have been drilled amongst considerable protests.
The UK's strengths in financial services have led it to play a leading role in energy trading through markets such as ICE Futures (formerly the International Petroleum Exchange). The price of Brent Crude from the British North Sea remains the major benchmark for the international oil trade, and the National Balancing Point market is the benchmark for most of the gas traded across Europe. The difficult offshore conditions make the UK a high-cost producer; in 2014 the average development cost was $20.40/boe and the operating cost was $27.80/boe for a total of $48.20/boe. In 2014 the industry spent £1.1bn on exploration, £14.8bn on capital investment and £9.6bn on operating costs. Fields developed since 1993 are taxed through an additional corporation tax on profits, in 2014 the industry generated £2.8bn in direct taxes.
Since 1965, 3, 970 exploration and appraisal wells have been drilled on the UKCS. In 2014, 104 new wells and 54 sidetracks were drilled.
Over four decades since the 1960s, the industry has spent £58 billion (2008 money) on exploration drilling. In 2008, £1.4 billion was spent finding new oil and gas reserves.
In 2008, 300–400 million barrels (48, 000, 000–64, 000, 000 m3) of oil and gas equivalent (boe) were discovered. The average size of the oil and gas fields discovered between 2000 and 2008 was 26 million boe, compared with an average of 248 million boe in the ten years from 1966.
In 2008, the UK was the 14th largest oil and gas producer in the world (10th largest gas producer and 19th largest oil producer). In Europe the UK is second only to Norway in oil and gas production.
Oil and gas production from the UK sector of the North Sea peaked in 1999, but the UK remains a substantial producer today. Over the last four decades, 39 billion boe have been extracted on the UKCS. In 2008, the combined production of oil and gas was 1 billion boe (549 million barrels (87, 300, 000 m3) of oil and 68 billion cubic metres of gas). This represented a fall of 5% compared with 2007 (6% oil and 3% gas), a slight improvement on the decline rate in 2002-2007 which averaged 7.5% per annum.
Role in supplying energy to the UK
As of 2008, just over three quarters of the UK's primary energy demand was met by oil and gas. In 2008, oil produced on the UKCS satisfied almost all domestic consumption (97%) while gas produced in the UK met about three quarters of demand. In 2020, it is estimated that 70% of primary energy consumed in the UK will still come from oil and gas, even upon achievement of the Government's target to source 20% of energy from renewable sources. This will be a combination of oil and gas produced domestically and imports. The UKCS has the potential to satisfy 40% of the UK's oil and gas demand in 2020, if investment is sustained.