Exploration And Production In The UK
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Crude Oil

  • Although a number of new fields are expected to come online in 2013, UK production will continue to decline as new production will not be sufficient to offset the declines.
  • In 2012, UK produced approximately 1 million bbl/d of liquid fuels, of which about 881,000 bbl/d was crude oil. The 2012 liquid fuels production level was about 14 percent lower than the 2011 production level, and it reached the lowest production level since the 1970s. EIA's Short-Term Energy Outlook expects UK oil production to continue to decline, remaining below 1 million bbl/d through the end of 2014. The main reason for this decline is the overall maturity of the country's oil fields and diminishing prospects for new substantial discoveries in the future. Although its proximity to major consuming markets makes UK exploration attractive, recent increases in taxes will continue to affect the attractiveness of the UK fields in the longer term.
  • Three main grades of oil are produced in the UK: Flotta, Forties, and Brent blends. They are generally light and sweet, which makes them attractive to foreign buyers.
  • Flotta is the smallest and lowest quality stream produced in the UK. The stream is made up of very small amounts of oil from the Claymore and Piper fields, as well as production from the North Tartan, Duart, Tweedsmuir, and Tweedsmuir South fields. The Flotta blend total production in 2012 was approximately 50,000 bbl/d. Talisman Energy operates all of the producing fields with the exception of the MacCulloch, which is operated by ConocoPhillips. Flotta crude is loaded at the Talisman Energy-operated Flotta terminal, in the Orkney Islands. The terminal has a crude oil jetty and a single-point mooring facility, which can accommodate tankers up to 200,000 deadweight tons. The jetty can accommodate tankers up to 150,000 deadweight tons. According to Energy Intelligence, the terminal has six crude oil storage tanks with a combined capacity of 3.5 million barrels.
  • Forties Blend Crude Oil is made up of oil from 70 fields spread over a large area of the North Sea, the biggest of which is the Buzzard oil field. Forties contributes about half of the total UK North Sea production, totaling about 500,000 bbl/d in 2011. These various fields contribute condensate, medium-gravity oil, and moderately sour crude. The Forties system occupies most of the Central North Sea, located south of the Brent complex and east of Flotta. The Forties system has fifteen field operators, according to Energy Intelligence, including BP, Shell, Talisman Energy, CNOOC, Apache, and Suncor. Once produced, Forties blend is shipped via the 170-kilometer pipeline to Cruden Bay, where it is pumped another 200 kilometers to Hound Point, Forties' loading port. This port has two jetties that can accommodate tankers up to 300,000 and 150,000 deadweight tons, respectively. In addition, the port has 4 million barrels of storage capacity.
  • Brent stream is a light, sweet crude. Nearly 40 UK fields contribute to the blend, although very little production comes from the once-prolific Brent field, after which the stream was named. According to Energy Intelligence, at its peak in 1984, the Brent field alone produced 400,000 bbl/d, with the other five major contributing fields (Thistle, Dunlin, Cormorant North, Ninian, and Magnus) peaking at a total of over 100,000 bbl/d in the mid-1980s. In 2012, all of these fields combined produced about 70,000 bbl/d, according to the DECC. Despite the declining physical volumes associated with the Brent blend, its importance as a financial benchmark is increasing.
  • The Brent blend is transported to the Sullom Voe Oil Terminal via pipelines. This terminal, located in Shetland, is operated by BP on behalf of a consortium of companies and has four loading jetties, all of which can accommodate tankers of up to 250,000 deadweight tons. In addition, the terminal has 16 storage tanks, 12 of which store up to 7.2 million barrels of the Brent blend.
Brent, the global oil benchmark
  • Brent, the oil stream, is different from Brent, the price. Brent (the price) is the benchmark for approximately two-thirds of internationally traded crude oil. As a benchmark, Brent is used by producers, refiners, and traders for establishing long- and short-term contracts in both physical and financial markets for oil deliveries around the world.
  • The Brent crude oil price reflects not only the UK Brent stream, but also three other streams that are included in the trading and pricing at this location: Forties, Oseberg and Ekofisk streams. The latter two are produced in the Norwegian part of the North Sea. The four streams that make up the Brent benchmark produce a light, sweet crude oil.
  • Despite declines in physical production volumes, the popularity of the Brent futures contracts has increased as evidenced by its exchange volume. Brent is traded on the Intercontinental Exchange and, more recently, on the New York Mercantile Exchange. Futures contracts are exchange-traded contracts for the delivery of a specified quantity of a commodity at a specified time and place in the future. Brent does not require physical delivery upon contract expiration, but rather is settled financially, making it an ideal vehicle for hedgers.

UK's oil fields and operators

  • Nexen was the largest operator in the UK in terms of oil production, with a total of approximately 192,000 bbl/d produced in the five fields it operated in 2012, according to the DECC. Nexen-operated fields accounted for 18 percent of total UK production in 2012.
  • BP is also a significant operator in the UK, although its production has declined over the last few years as the company refocused its exploration and production elsewhere. It operates 20 fields in the UK, which are located offshore with a total output of approximately 132,000 bbl/d in 2012 according to the DECC.
  • The UK's largest producing field in 2012 was the Nexen-operated Buzzard Oil Field, which produced an average of 140,000 bbl/d during the year. This production volume was far short of its production capacity of more than 200,000 bbl/d, as the field was plagued by various technical and operational issued during the year. Buzzard field came online in 2007 and reached full capacity in 2008. Since then, however, average annual production at the field has declined each year.
UK's largest producing oil fields, 2012
  1. Buzzard Oil Field - 140,100 Bbl/Day
  2. Forties Oil Field - 40,600 Bbl/Day
  3. Schiehallion Oil Field - 40.3
  4. Captain Oil Field - 31,100 Bbl/Day
  5. Alba Oil Field - 22.9
  6. Foinaven Oil Field - 20,100 Bbl/Day
  7. Clair Oil Field - 17.7
  8. Magnus Oil Field - 13.2
  9. Alwyn North - 12.9
  10. Ettrick Oil and Gas Field - 12.8
  • During 2012, a number of new field developments took place, mainly by smaller oil field operators. The Apache-operated Bacchus field came online in April 2012 and produced an average of 4,000 bbl/d for the year. The Lybster field, located in the Central North Sea, came online in May 2012.
  • A number of new fields are expected to be developed in 2013, nearly all of which are located in the North Sea. The only exception is the Conwy & Corfe field, located offshore in the Morecambe Bay in northwest England. These projects are likely to yield relatively small volumes of oil, only partly stemming the downward trend in UK's oil production. The two heavy oil projects, Statoil's Bressay Oil Field and Chevron's Mariner Oil Field, are expected to come online in 2015 or later.
UK's new field developments, 2013

Field name Development start date Operator Total recoverable reserves
(million barrels)

  1. Godwin January Talisman 5.5
  2. Ptarmigan January Premier 3.5
  3. Conwy&Corfe February EOG 16.7
  4. Kinnoull March BP 48.9
  5. Bentley September Xcite Energy 25.6
  6. Enochdhu September ConocoPhillips 14.7
  7. Alma&Galia October EnQuest 28.9
  8. Crawford Redevelopment
    • November
    • EnQuest
    • 26.8 million barrels

Natural Gas

  • The UK produced 1.5 Tcf of dry natural gas in 2011, falling about 5 percent compared with the previous year. During 2011, gross natural gas production totaled 1.7 Tcf. Data published by PFC Energy indicate that UK's gross natural gas production in 2012 was about 15 percent lower than the year prior, the lowest level since 1985. In addition to the long-term declining production trend, natural gas output fell as a result of the Elgin gas leak that affected natural gas production since it occurred in March 2012. According to PFC Energy, UK gross natural gas production totaled 1.5 Tcf in 2012.
  • The largest concentration of natural gas production in the UK is the Shearwater-Elgin area of the Southern Gas Basin. The area contains five gas fields: Elgin, Franklin, Halley, Scoter, and Shearwater. Most of the leading oil companies in the UK are also the leading natural gas producers, including BP, Shell, and ConocoPhillips.
  • UK's largest share of natural gas production among all fields and gathering systems comes from the Scottish Area Gas Evacuation (SAGE) Pipeline, which produced a total of 246 Bcf in 2011. The SAGE system includes the Atlantic, Beinn, Beryl, Boa, Brae (Central, East, North, South, West), Braemar, Britannia, Brodgar, Caledonia, Callanish, Cromarty, Enoch (UK), Kingfisher, Larch, Maclure, Ness, Nevis, Scott, Skene, Thelma, Tiffany, Toni, and Tullich fields. In addition to SAGE, the Shearwater-Elgin Area Line (SEAL) brought in more than 200 Bcf of natural gas during the year. Producing fields that feed this line include Elgin, Franklin, Glenelg, Halley, Scoter, Shearwater, and Starling.
UK's new gas field developments, 2012 and 2013
  • Field name, Development start date, Operator and Total recoverable reserves
  1. Islay Gas Field
    • Apr-12
    • Total
    • 17 (mboe)
    • 91 (Bcf)
  2. Ensign Gas Field
    • May-12
    • Centrica
    • 18
    • 96
  3. Devenick Gas Field
    • Jun-12
    • BP
    • 60
    • 321
  4. Seven Seas Gas Field
    • Jul-12
    • Centrica
    • 11
    • 59
  5. Breagh Aug-12 RWE 97 519
  6. Clipper South Aug-12 RWE 32 171
  7. Rhyl Sep-12 Centrica 8 43
  8. Jasmine Dec-12 ConocoPhillips 201 1,075
  9. Katy Jan-13 ConocoPhillips 12 64
  10. Rochelle Jan-13 Endevour Energy 34 182
  11. Kew Feb-13 Centrica 7 37
  12. York Mar-13 Centrica 13 70
  13. Arran Sep-13 Dana 45 241
  14. Greater Stella Area Sep-13 Ithaca 50 268
  15. Carrack West Nov-13 Shell 9 48
  16. Juliet Nov-13 GDF Suez 11 59
  • A number of new fields are expected to be developed in 2013, the majority of them located in the Southern Gas Basin. Of the fields that were developed in 2012, only marginal new natural gas volumes have come online.

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