The average daily value of UK oil production in March reached its highest real level since October 1990, according to the May edition of the Royal Bank of Scotland PLC's Oil and Gas Index. That daily average of �44.8 million was 114.5% more than the average recorded in March 1999, thanks to surging oil prices and a slight weakening of British pound sterling against the US dollar.
The bank releases monthly indexes for oil, gas, and the two products combined. The indexes are estimates of UK North Sea production, using 1980 production as a baseline (1980 = 100). The Royal Bank of Scotland's May report compares oil and gas indexes for March 2000 with the previous month and with year-ago results.
March results
The oil index rose to 158.3 in March 2000 from 155.9 in February, while the gas index fell slightly, to 360 in March from 372 in February. Combined output fell by 0.7%, resulting in a decline in the combined oil and gas index to 212 from 213.5.
Oil output increased by 38,715 b/d, or 1.5%, for the month, but was down 2.7% for the year. Some of the March production increases were from Enterprise Oil PLC's Pierce field (28,300 b/d), BP Amoco PLC's Andrew field (21,500 b/d), BHP Petroleum Pty. Ltd.'s Liverpool Bay field (11,500 b/d), and Conoco (UK) Ltd.'s Banff field (10,798 b/d). Decreases in oil production were recorded at BP Amoco's Schiehallion, ETAP, and Miller fields (18,500 b/d, 9,000 b/d, and 6,500 b/d, respectively); and at Royal Dutch/Shell's Heron field (10,000 b/d).
Gas output fell 3.2%, or 407 MMcfd, for the month, because the start of spring brings on a seasonal decline in production, according to the bank. Decreases were recorded at BP Amoco's Lomond field (65 MMcfd) and Shell's Gannet field (58 MMcfd). Yearly gas production was up 10.2%, however, and daily output in the 12 months prior to March 2000 finished 12.3% higher than a year earlier.
Few fields recorded gas output increases during March, and those that did only made modest gains, according to the report. Gas production from Marathon Oil UK Ltd.'s East Brae field experienced the most significant increase, rising by 50 MMcfd.
The price of Brent crude averaged $27.27 in March, down 2.5% from February, but April saw a substantial decline to $23.15/bbl, or 15.1%, as the market reacted to production increases made by the Organization of Petroleum Exporting Countries.
Current price levels are sustainable only with continued production restraints as the marginal cost of "new" oil lies well below OPEC's unofficial $22-28/bbl range, said Stephen Boyle, head of business economics at the Royal Bank of Scotland. (OPEC agreed in March that, if the price of the OPEC basket of seven crudes goes outside the $22-28/bbl range, the members would adjust production accordingly to affect a decrease or increase in price.)