UK production of oil and gas has dropped sharply, raising questions over the future of the industry, British industry leaders have warned.
According to data released by trade body Oil and Gas UK, despite the record high investment in British oil and gas development the actual output dropped 19 percent in 2011 and a further 14 percent last year, the BBC reported. This year, the rate of decline is expected to slow down but the direction remains the same — it is predicted that production in 2013 will decrease by at least 8.5 percent and 2014 is unlikely to buck this trend.
The trade group estimates that the positive impact of the current investment levels will start to be felt in 2015 at the earliest, but the organization does not have high hopes for a continued record level of investment, as it is predicted to start going down as early as this year, from the current £13.5 billion to between £8 billion and £10 billion by 2015.
Another cause for concern is the rising cost of extracting an average barrel of oil. The actual proportion extracted of each potential barrel of oil dropped to 60 percent in 2012, compared to more than 80 percent seven years ago. If operators want to reach the full potential for extraction in oil and gas fields they will have to face higher development and running costs, with the total expenditure reaching up to a trillion pounds, Oil and Gas UK estimated.