Business

United Kingdom Energy Analysis

The United Kingdom ranks first amongst European Union countries for its Oil production capacity.

The United Kingdom ranks first amongst European Union countries for its Oil production capacity. It is also the second largest producing country of Natural gas in the same region. UK remained the net exporter of both oil and natural gas for many years but the trend shifted after 2004 when it became the net-importer of natural gas. In 2005 it started importing crude oil as well as its net imports. In 1990s UK oil and natural gas fields delivered the maximum output but gradually they reached their maturation level. The new petroleum and gas reserves were not discovered at the same rate. The UK government was prepared for this declining shift in its petroleum reserves and resources. It has planned major policies in this regard that were focused on: investing in renewable energy sources, entering in to energy contracts and agreements with Norway and acquiring technological enhancement to ensure recovery from the maturing reserves of gas and oil.

UK Oil Reserves, Exploration, and Production

The Oil and Gas Journal reported that in 2011, UK had above 2.9 billion barrels of crude-oil reserves. It was the highest proven crude oil reserves amongst the member EU countries. The production and consumption oil level of UK in 2010 was 1.4million barrels/day and 1.6million bbl/day respectively.

The majority of the country’s oil reserves are found in the North Sea off the Eastern coast of the UK in the UK Continental Shelf. The west of the Shetland Islands and the North Sea also possess considerable reserves. The Wessex Basin Wytch Farm field is the onshore oil field, the largest in Europe.

According to EIA the decline in UK production of oil will show a decline gradually and by the end of 2012 it will become 1.2 million bbl per day. In 2010 it was 1.4 million bbl per day. Chances of discovering more and more oil and gas reserves that could meet the demand levels substantially are diminishing as well. Condensates, refinery gain and natural gas liquids constitute the total oil production in the UK. Despite this, the stakes in exploration in the UK are high due to the increase in oil prices and the closeness of the North-sea to the major consuming markets. This term could be affected in the longer run by the increase in about 12% supplementary corporate tax for petroleum companies in the UK.

In 2010, seven oil fields started their production operations in the UK. Loirston and Falcon started it by the mid of 2011. Both of these oil fields have 1.79 million boe and 3.07 million boe of reserves respectively. Loirston reserves are operated by ExxonMobil and are located in Graben basin whereas Falcon reserves are located in East Shetland basin.

The UK remained the net exporter of crude oil till 2005, after that due to rise in demands and maturity of current reserves changed its status and it is now a net importer. UK crude oil is famous for its sweetness and they are light around 30o to 40o API. UK is home to the Brent benchmark and it is still exporting petroleum products to the E.U countries. Its significant export volumes go to E.U countries, Netherlands, Germany, and United States. Around eighty percent of its crude oil shipment is made to E.U countries. Netherland receives approximately 38 percent of exports, whereas Germany and United States get 22 percent and 17 percent respectively. Remaining portion of the exports that is around twenty three percent goes to various countries including Sweden, France, Denmark and Chile.

The United Kingdom receives its mega share of net imports from Norway that does not come in EU-27 member countries. In 2010 it imported around 1 million bbl / d about 72 percent of came from Norway and the rest from Russia. These trends have made UK an oil-transit country.

The United Kingdom has established a massive pipeline network to transfer oil extractions from North-Sea projects to terminals in northern England and Scotland. 110 miles(36inch) of pipe line is operated by British Petroleum that links the oil terminal project at Cruden-Bay with fields in the Forties-System. The Sullom Voe terminal in Shetland Island is also connected to the Ninnian system by the same company via 110 mile, 36 inch pipeline. Forties and Bruce fields are linked to the Cruden Bay by Britoil Plc that operates a 150mile(24inch) pipeline. Talisma is operating a 130 mile pipeline network that connects Flotta(Orkney Island) with Piper system. Sullom Voe and Cormorant fields are joined together by a 93mile-36 inch pipeline network jointly operated by Esso and Shell. Few of the crude oil onshore fields also form a part of this huge network. It includes an underground 90miles pipeline system that links Wytch field to Fawley’s refinery and Southampton export terminal. BP operates this link. ConocoPhillips operates the UK’s crude oil international pipeline that is Norpine 220 mile network. Norpine has a capacity of nine lacs bbl per day and it connects Teesside refinery and terminal with Ekofisk Norwegian oil fields.

Large producers of Oil in UK include BP with highest production, Shell, Total, and Nexen. Nexen operates the largest oil field named Buzzard. There is more focus on enhancing the current productivity as oil fields are maturing rather than discovering new oil reserves. This also resulted in large oil companies selling their assets to focus more on international projects. Due to this many new oil companies are entering the UK market.

 

Natural Gas Exploration and Production UK

United Kingdom has approximately 9 Tcf of proven gas reserves according to OGI 2011 estimate. Although the production capacity of natural gas in UK is quite significant, yet the country also imports gas from other countries. The main areas where these reserves are found are: 1) UKCS associated continental fields. 2.) Southern Gas Basin non associated gas fields adjacent to North sea Dutch sector 3.) Irish Sea non associated fields. It has remained a policy of UK government to promote Natural gas consumption for its industrial and energy sector rather than using coal and oil. The increase in natural gas consumption is continuously on a rise and according to an estimate 3.3 Tcf in 2010 that is seven percent more than 2009.

In 2010 the gas production in UK was 2 Tcf that is five percent less than the prior year but this decrease is 15 percent less than that of the last year. UK natural gas production is largest in Southern Gas Basin Shearwater Elgin area. There are five gas fields in this area namely Franklin, Elgin, Scoter, Halley and Shearwater. The leading natural gas production comes from the same companies involved in maximum oil production. BP, ConocoPhillips and Shell are the leading companies involved in gas exploration and production projects in UK.

Centrica is the largest gas distributer in United Kingdom. Mostly private companies are active in UK gas sector. They are carrying on major tasks of distribution and production as well besides the activities of gas exploration and production. Natural gas district controlled the major gas transmission in UK before it sold the four out of its eight gas distribution and transmission networks to Scotia Gas Networks and Northern Gas networks.

There are four liquefied natural gas import terminals in UK. Grain LNG terminal of National grid is the longest main operating terminals in the UK. Grain LNG terminal can receive / process up to 160 Bcf/yr of LNG.

In 2007 Excelerate Energy that is a US based company started commercial operation on Teesport LNG in 2007. Teesport LNG is a regasification dockside the first one in UK, and it is also considered as the second LNG operational facility in the United Kingdom.  It can deliver about 600MMcf/d of gas to UK market. In 2009 Petronas, BG and 4Gas also started operation in their Dragon LNG terminal. It has the capacity to transfer 1.1 Bcf/day. The South Hook LNG terminal owned by Qatar Petroleum, Total and ExxonMobil considered as the Europe’s largest LNG terminal with an initial capacity of 1.1 Bcf/day began its commercial operation in 2009. Mainly UK imports LNG from Qatar with small proportions of it coming from Algeria, Trinidad and Tobago, Egypt and Australia.

About the author

Paul Morris

Paul Morris is an entrepreneur, consultant and author. He is an advisor at Xpert Automation, a tech-based business incubator focused on scalable startups, and founder of ContentFy.

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