The North Sea Oil Production Model

Through the 1980s and 1990s, oil production in the North Sea increased dramatically and some individuals and organizations were claiming that production would continue to increase well beyond 2000, or at worst decline only marginally. One organization providing fairly rosy assessments for future North Sea production was the U.S. Department of Energy/Energy Information Administration (U.S. DOE/EIA). For individuals looking closely at field production, it was obvious by the middle 1990s that oil production in the United Kingdom (U.K.) and Norway would achieve peak production around 2000 and then decline fairly rapidly.

Based upon U.S. DOE/EIA data, U.K. oil production (crude oil + condensate) achieved peak production in 1999 at 2.684 mb/d. The average production rate for the first 11 months of 2005 was 1.649 mb/d or 1.035 mb/d (38.6%) less than the 1999 average. Based upon data from the Norwegian Petroleum Directorate (NPD), Norwegian oil production (crude oil + condensate) peaked in 2000 at 3.291 mb/d. In 2005, Norway’s oil production averaged 2.710 mb/d, a decline of 581,000 b/d (17.7%) since 2000. In 2005, 6 Norwegian fields declined by more than 20,000 b/d compared to 2004 (Table 1).

Field	Absolute Decline (b/d)	% Decline
Troll	60,994	19.92
Snorre	48,336	24.29
Draugen	30,844	22.91
Norne	30,011	24.84
Statfjord	24,257	20.19
Gullfaks	23,701	14.15

Table 1

The decline of Norway’s large oil fields illustrates why Norwegian oil production is declining rapidly (8.4% in 2005 compared to 2004). The same process is happening in the U.K.

The U.S. DOE/EIA’s International Energy Outlook 2001 (IEO2001), stated the following concerning future U.K. oil production:

“The United Kingdom is expected to produce about 3.1 million barrels/day by the middle of this decade (~2005), followed by a decline to 2.7 mb/d by 2020.”

In the IEO2003, the U.S. DOE/EIA stated the following concerning Norwegian and North Sea oil production:

“The decline in North Sea production is slowed as a result of substantial improvement in field recovery rates. Production from Norway, Western Europe’s largest producer, is expected to peak at about 3.4 million barrels per day in 2004 and then gradually decline to about 2.5 million barrels per day by the end of the forecast period with the maturing of some of its larger and older fields.”

Note that these statements were made after production had peaked in both countries. The U.S. DOE/EIA includes liquified petroleum gas, refinery gain and other hydrocarbon liquids in their assessments but those components make up a relatively small part of oil production in Norway and the U.K. The statements above illustrate how poor the U.S. DOE/EIA long-term assessments can be.

This is important because I’ve been hearing comments from and seeing assessments by the U.S. DOE/EIA, other organizations and individuals which describe a big increase in global oil production in the next ~20 years, largely based upon big production increases in deepwater regions (>1000 ft water depth) of the world. In the next 4 years there will be a large number of deepwater oil projects coming on-line in the Gulf of Mexico (GOM), Campos Basin (Brazil) and off west Africa, regions where most of the deepwater oil will be found.

In the case of the U.S. GOM, 6 large fields with peak production >=100,000 b/d are expected to come on-line during 2004-2007 bringing ~850,000 b/d of summed peak production on-line. It’s possible that U.S. oil production will increase over the next ~3 years due to the introduction of those fields, assuming no further hurricane problems. The down side of the rapid increase is that the increase will be followed by a rapid decrease, similar to what has happened in the U.K. and Norway. It appears to me that U.S. deepwater GOM oil production will peak in approximately 2010, as will Campos Basin production. Deepwater production off west Africa will peak somewhat later. Peak production in those areas will be followed by fairly rapid production declines. Recent assessments by the U.S. DOE/EIA don’t account for rapid declines after peak production for deepwater regions so don’t be surprised if their long-term projections are off dramatically.