WoodMac: 1996 tops 1995 for NW Europe

Northwest Europe's oil and gas industry generally had a better year in 1996 than in 1995, contends Wood Mackenzie Consultants Ltd., Edinburgh, with high oil prices the big surprise. The analyst said that, contrary to all expectations at the beginning of the year, the price of Brent crude oil averaged $20.82/bbl in 1996, up from $17.19/bbl in 1995. North Sea oil production reached a record 5.94 million b/d last year, despite the U.K. producing less than expected, while North Sea gas output

Feb. 24, 1997

3 min read

Northwest Europe's oil and gas industry generally had a better year in 1996 than in 1995, contends Wood Mackenzie Consultants Ltd., Edinburgh, with high oil prices the big surprise.

The analyst said that, contrary to all expectations at the beginning of the year, the price of Brent crude oil averaged $20.82/bbl in 1996, up from $17.19/bbl in 1995.

Increased production

North Sea oil production reached a record 5.94 million b/d last year, despite the U.K. producing less than expected, while North Sea gas output also reached a new peak of 15.534 bcfd.

Oil output rose from 5.61 million b/d in 1995, with Norway hitting a new high of 3.24 million b/d and Denmark also setting a new mark with an average of 207,000 b/d.

Total U.K. oil output averaged 2.57 million b/d last year, WoodMac said, a relatively disappointing year "in the light of our forecast in February predicting a record output of 2.71 million b/d.

"The unexpected shortfall in production arose due to a combination of delays to field start-ups in Douglas, Foinaven, Harding, and Lennox; operational problems in Beryl, Magnus, Nelson, and Scott; and greater than expected production declines from some of the more mature fields."

The new North Sea gas peak was 17% up on the 13.235 bcfd average of 1995, said the analyst, buoyed mainly by a 15% hike in U.K. gas output to 8.272 bcfd and a 30% rise in Norway's output to 3.814 bcfd.

Drilling rebound

North Sea exploration also bounced back last year, said WoodMac, with 36 discoveries bringing new reserves amounting to an estimated 1.15 billion bbl of oil equivalent.

Overall drilling activity increased, with 160 wells spudded in 1996 compared with 132 in 1995.

"U.K. exploration and appraisal drilling activity reversed the decline seen since 1990," said Wood Mackenzie. "There were 101 new well starts in 1996, up from 83 in 1995. Of the total well starts, 81% were exploration wells, an increase on the 1995 figure of 75%."

Norwegian drilling activity declined, with only 25 exploration and appraisal wells spudded, compared with 31 in 1995. However, Netherlands offshore drilling rose sharply, with 28 well starts in 1996 compared with 11 in 1995.

Thirteen U.K. wells were discoveries last year, accounting for a total 370 million bbl of oil equivalent (BOE) in additional reserves. Reserves found per exploration well drilled stood at 4.45 million (BOE) last year, compared with 2.1 million BOE in 1995.

"In Norway," said Wood Mackenzie, "nine new discoveries were made, which are thought to hold around 450 million BOE of reserves. When reserves upgrades for existing fields are taken into account, reserves found matched production for the year.

"In the Netherlands, around 330 million BOE is estimated to have been found, with 12 discoveries being made. This equated to almost twice the level of offshore reserves produced during the year."