Production efficiency (PE) has risen for a fifth consecutive year. In 2017 it reached 74%, driving increased production in the United Kingdom Continental Shelf (UKCS).

The 1% improvement in efficiency from 2016 helped contribute an additional 12 million barrels of oil equivalent (boe) in 2017; or 32,000 extra boe per day.

The report compares actual production to the theoretical maximum economic potential of the fields (and associated infrastructure), compared to previous years. PE is an important indicator for the industry and the OGA as a core element of production optimisation and asset stewardship performance.

Total UKCS production potential in 2017 (if every field produced to maximum capability 100% of the time) was 800 million boe, a slight increase on 2016. This is due to a number of new fields coming on line, maturing fields.

The composition and total volume of production losses has changed and improved significantly since the efficiency low point of 2012. Total production losses have fallen by 65 million boe.

Well losses represented 10% of total potential lost in 2012. This fell to 4% in 2017, however the recent trend in well losses has been relatively flat. The greatest contributor to improvements in production efficiency has been a reduction in plant losses. In 2012, 26% of total potential was lost at the plant choke. In 2017 this fell to 15%.

Export losses is the only loss category showing an increase since 2012. They have now overtaken wells as the second largest loss category. Export losses as a percentage of potential doubled between 2012 to 2017.

UKCS Unit operating cost and PE

While PE is a measure of efficiency, the ultimate goal is to maximise value. This is why cost must also be considered alongside efficiency.

The unit operating cost (UOC) of the UKCS highlights the potential for value by combining production and cost. The other aspect when considering profit is the oil price.

The UOC of the UKCS fell rapidly in response to the recent oil price downturn, while at the same time PE was improving. In 2017, UOC levelled out after a period of significant reduction.

When looking at both measures together it can be seen that momentum has slowed in 2017 with UOC little changed and the pace of improvement in PE lower. 

Refinery utilisation rates are the total volume of refined products produced vs the theoretical maximum potential in each year. It can be seen that refinery utilisation rates have been relatively stable and does not trend with oil price.

Production efficiency has shown improvement over the same time period, with a seeming inverse correlation between oil price and PE.

In the past, sustained higher oil prices have coincided with periods of low efficiency. The challenge now is for industry to continue improvements to PE seen in recent years amidst a more bullish outlook to oil price.