The transformation of the North Sea
There is a changing of the guard underway in the North Sea. Every few years people talk about the imminent demise of the basin but the UK Continental Shelf (UKCS) is a resilient place. Cost discipline combined with innovation is helping companies to navigate the economic turbulence the region has faced in recent years.
Three years on from our groundbreaking report ‘Sea Change – the Future of North Sea Oil & Gas’, PwC and OGUK have collaborated to bring you a current perspective, based on interviews with over 20 senior stakeholders from the industry.
These are fundamental questions to pose and some might argue even existential. For nearly 50 years, oil and gas from the North Sea has shaped the UK’s economic prosperity. We are now witnessing the dawn of a new low carbon era where the North Sea has the potential to shape the energy transition and underpin the nation’s ongoing prosperity.
Three years ago, the industry was in intensive care. Investment has collapsed. Drilling activity was on the decline and exploration activity was at an all-time low. Downsizing and job cuts were the order of the day and few expected the UKCS to regain its competitive form.
Production is up
Oil and gas production is up by 20% over the last four years, rising from 1.4 million barrels of oil equivalent per day (boe/d) to 1.7m boe/d in 2018.
Production efficiency is at its highest for a decade and unit production costs have halved to US$15-16/boe.
After three bleak years, the industry sanctioned £3.3 billion of investment in the UKCS in 2018 and there is a rich diversity of companies investing in field developments.
"As an industry we have to continue to find ways to develop oil and gas safer, cheaper, faster and with a smaller carbon footprint. But if ever there was a region renowned for its ability to drive positive change, it’s the North Sea."