LONDON – UK gas production between January and August 2021 totaled 17 bcm, down 28% on the comparable period for 2020, according to Wood Mackenzie, a Verisk business.
Factors included delays to new projects and maintenance, notably the three-week program in June to maintain the Forties Pipeline System in the UK central North Sea (postponed from last summer).
This resulted in the shutdown of supply from all connected 67 offshore fields, while further work on other parts of the system throughout the year meant field clusters such as Elgin/Franklin, Shearwater, and ETAP have all been offline for longer.
And according to the consultancy, some operators have used the downtime to conduct their own maintenance campaigns, extending the three-week shutdown period at multiple hubs.
The delay to start-up of the Harbour Energy-operated Tolmount field in the southern North Sea, from July to December, further contributed to supply under-performance.
While UK gas production should recover over the remainder of the year, with total output in August 72% higher than in July, overall 2021 production will be slightly over 27 bcm, down from 34 bcm in 2019 and 35 bcm in 2020.
But output should rebound to 35 bcm in 2022, with the recovery driven by the start-up of new gas projects such as IOG’s Saturn Banks hubs, and others deferred from 2020 due to the coronavirus, such as Arran, Columbus, and Finlaggan in the UK central North Sea.
There should be further contributions from infill drilling at large production complexes such as Elgin/Franklin, Tolmount, and Culzean in the same region remaining on plateau through 2022.
Wood Mackenzie noted that an already tight UK winter supply balance is premised on this recovery, and further disruption will likely put the UK system under significant strain.
Indigenous gas storage is limited, so the UK could pursue higher gas imports from Norway or mainland Europe; additional LNG cargoes; increased coal burning; and higher electricity imports.
However, Norway’s gas production has also been affected by planned and unplanned maintenance, while continental Europe has been struggling to satisfy its own gas storage needs ahead of the coming winter.
Wood Mackenzie expects both UK and European gas prices to remain at current high levels throughout the winter, with UK offshore producers keen to restore lost production back quickly in order to capitalize.
But while investment into domestic gas supply remains crucial to ensure a stable energy transition in the UK to renewable energies and new technologies, the Scottish First Minister’s recent suggestion that the UK government reassess licenses already issued for future oil and gas developments is creating uncertainty for greenfield projects, Wood Mackenzie said.