UK Oil Output Up on Six Oilfield Start-Ups

LONDON Sep 27, 2007 (Dow Jones Newswires)

U.K. crude oil production increased 2.8% during the second quarter compared with the same quarter a year ago due to the start-up of six oil fields, including the very large Buzzard field in the U.K. North Sea, the government's latest energy statistics report showed Thursday.

Total indigenous U.K. production of crude oil and natural gas to liquids increased to 19.7 million metric tons as six fields were brought online since the beginning of the year, according to the energy statistics report published by the Department for Business, Enterprise and Regulatory Reform.

The start-up of the oil fields transformed the U.K. into a net oil exporter during the second quarter of this year, exporting 0.8 million tons more than it imported of oil and oil products. The U.K. was a net oil importer in the second quarter of last year.

Overall, the U.K. consumed 4% less energy in the second quarter than the same period a year ago, broadly in line with a 5.4% drop in energy production to 46.5 million tons of oil equivalent during the second quarter of this year.

Total indigenous natural gas production continued to fall, dropping 9.6% to 206.6 terrawatt hours from the same quarter a year ago. The drop was attributed to steadily declining natural gas reserves in the North Sea.

New gas import facilities, such as pipelines and liquefied natural gas terminals, however, transformed the U.K. into a net gas importer, during the second quarter. Net imports of gas were 24.9 TWh, whereas the U.K. was an exporter in the second quarter of 2006.

Higher net imports helped satisfy a 4.6% rise in total gas consumption. U.K. power generators consumed 26.5% more gas in the second quarter than the same period a year ago, offsetting a decline in household gas consumption. Power generators consumed more gas due to lower gas prices and a drop in nuclear power generation caused by the prolonged shutdown of two nuclear power plants.

Total electricity output also decreased by 0.2%, or 0.2 TWh, during the second quarter of this year compared with the same quarter a year ago. Both coal and nuclear-fired power generation dropped significantly, the former due to more competitive gas prices, and the latter due to a drop in nuclear power generation capacity.

The U.K.'s provisional coal production figures for the second quarter show coal production fell 11% on the quarter to 4.4 million tons, partly due to a 19.8% drop in deep mined coal production and a 2.4% fall in opencast production. However, both deep mined and opencast production were higher than in the first quarter of 2007.

BERR also published a renewables report in which it said that Scotland produced twice as much electricity from wind power than England in 2006. England, however, produced more wind than Wales and Wales in turn produced about three times more wind power than hydro power generation during 2006.

Copyright (c) 2007 Dow Jones & Company, Inc.

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