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UK DATA: Oil output slumps 15% in Sep-Nov as more shutdowns loom in 2021


Maintenance, lack of drilling behind output drop

Oil output over first 11 months down 8%

Industry planning numerous 2021 shutdowns

  • Author
  • Nick Coleman
  • Editor
  • Alisdair Bowles
  • Commodity
  • Natural Gas Oil

London — UK oil output slumped by 15% year-on-year in the three months to November, to 931,000 b/d, official statistics published Jan. 28 showed, with deferred maintenance set to continue weighing down production in the coming months according to industry sources.

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Statistics from the Department for Business, Energy and Industry Strategy showed crude output dropped by 17% on the year in the September-November period to 838,000 b/d, with a slight uptick in natural gas liquids output.

Oil output for the year to Nov. 30 was down 8% at 1.02 million b/d, the statistics showed.

BEIS did not comment on the cause of the reduction, but industry sources have said higher-than-normal levels of maintenance were underway following the deferral of maintenance from earlier in the year, when activity was restricted by the COVID-19 pandemic.

Two of the crude grades produced offshore the UK, Brent and Forties, contribute to Platts' Dated Brent oil price assessments, used in crude deals around the world.

The pandemic and accompanying price crash have disrupted the modest recovery in UK output seen in recent years, as workforce levels have been reduced, in-fill drilling has been postponed, and new project developments delayed.

Disruption ahead

Industry sources have indicated significant disruption in the months to come, centered on, but not confined to, a major shutdown of the Forties pipeline, the UK's largest crude artery, for refurbishment work starting May 27.

The main Forties shutdown is due to last three weeks, until June 16, but an offshoot known as GAEL, which serves fields such as Total's Elgin-Franklin complex, will be closed for a full month, Ineos has said.

In addition, a shutdown of Chrysaor's Britannia hub, which feeds oil into Forties, is set to last almost six weeks, from May 22 to July 1, according to a disclosure published by National Grid. The work at Britannia is partly to tie in a new project, the Finlaggan field, being developed by independent Zennor Petroleum.

Elsewhere, production is set to be disrupted by a near-three-week shutdown starting April 15 of the St Fergus gas plant, which processes gas from fields in both the UK and Norwegian sectors of the North Sea.

The exact impact of such shutdowns on oil production levels is unclear, with some companies more affected than others. Chrysaor has said it expects its full-year output to be down by about 15% this year due to heavy maintenance and recently deferred drilling.

On the other hand Shell, which has part of its production in the West of Shetland area and is likely to be bringing new projects on stream, expects similar output levels to last year, a source close to the company told Platts this month.

The International Energy Agency forecasts UK oil production will drop from 1.05 million b/d in 2020 to 1.00 million b/d in 2021.

The dip in UK output contrasts with the Norwegian industry's revived fortunes following the startup of the flagship Johan Sverdrup in 2019, which lifted the country's oil output by 15% last year to 2.0 million b/d.

Note: UK oil output statistics from BEIS are converted at a rate of 7.55 barrels/metric ton for crude and 11.5 b/mt for natural gas liquids.