8 Production and Disposal Activities

OIL PRODUCTION

8.1 A total of 128 million tonnes of oil was produced in 1997.

8.2 Production commenced at 17 offshore oil fields during 1997: Teal and Iona in January, Captain in March, Gannet F in June, Dauntless, Durward and MacCulloch in August, Bladon in September, Kingfisher, Brae West, Sedgwick, Fleming & Drake in October, and Curlew, Foinaven, Merlin and Erskine in November.

8.3 Donan ceased production in December 1997.

OIL AND GAS PRODUCTION FORECASTS

a) Oil Range

8.4 The forecast is presented as a range of outcomes for each year to take account of the many uncertainties involved. The figures include stabilised crude oil, natural gas liquids and condensates.

8.5 Production is expected to be sustained above the previous peak levels of the mid-1980’s, but the rate at which new developments come forward in the later years of the forecast will depend particularly on the level of oil prices.

b) Gas Range

8.6 The forecast relates to United Kingdom Continental Shelf (UKCS) production available for sale. The importance of UK household sector demand means that production in particular years will be influenced strongly by winter temperatures relative to the seasonal average.

8.7 Gas production has grown strongly as gas-fired generation capacity has come on stream. Uncertainty about later years of forecast relates mainly to the possibility of further significant investment in such capacity, and degree of utilisation of the UK-Belgium interconnector which will allow new gas developments to find profitable sales opportunities in a range of western European markets.

OIL DISPOSAL

8.8 During 1997, 50.8 million tonnes of UKCS oil (including natural gas liquids) were delivered to UK refineries, representing 39.8% of total deliveries. Throughout the same period, 2.8 million tonnes were delivered to other UK sites such as petrochemical plants and storage depots. Exports of UKCS oil (including NGLs) in 1997 amounted to 74.1 million tonnes, compared to 42.6 million tonnes of imports. Exports were almost entirely to the markets of other member countries of the European Union or of the International Energy Agency. The majority of the remainder went to traditional markets. Table 8.1 shows the sources of UKCS crude oil received at UK terminals during 1997.

Table 8.1 - Oil terminals receiving UKCS crude oil in 1996/7

(1) In addition to these exports 16.7 million tonnes was exported from offshore loaders and 3.6 from Hamble Terminal.

(2) Excludes Gryphon Alba and Captain crude transported to Nigg Bay by shuttle tanker, and Foinaven transported to Flotta West by shuttle

tanker prior to export. These fields are included with the offshore loaders in footnote (1) above.

(3) Exports can be higher than receipts because of stockdraw.

To download this table click the appropriate format: Excel 4 or CSV file.

GAS PRODUCTION AND DISPOSAL

8.9 In 1997, gas produced from the UKCS increased to 91.8 billion cubic metres (3.24 trillion cubic feet). This included gas used by operators for drilling production and pumping operations. Production commenced at 3 new offshore fields. There were no new onshore gas fields.

8.10 After taking account of the 2.0 billion cubic metres of gas landed in the Netherlands from the UK share of the Markham transboundary field and from the Windermere field, and exports to Eire from Scotland, total sales of UKCS gas to gas suppliers amounted to 84.0 billion cubic metres (3.0 trillion cubic feet). This was 1.9% higher than in 1996. In addition, 1.3 billion cubic metres (0.04 trillion cubic feet) of gas were imported from the Norwegian shares of the Frigg and Murchison transboundary fields and from the wholly Norwegian owned Lille Frigg, East Frigg and Frøy fields. Norwegian imports were at 1.5% of total supplies in 1997 compared to 2.1% in 1996.

Chart 8.1 - 1997 Oil production by field (million tonnes)

"Other fields" are those producing less than 1.5 million tonnes per year. More exact figures for all fields are given in Appendix 6.

Chart 8.2 - 1997 Gas production by field (billion cubic metres)

(1) "Other fields" are those producing less than 1 billion cubic metres per year. More exact figures for all fields are given in Appendix 7.

Chart 8.3 - Total UKCS disposals of crude oil & NGLs 1997

GAS FLARING

8.11 Under the terms of petroleum production licences, gas may be flared only with the consent of the Secretary of State for Trade and Industry. During 1997 an average of 5.54 million cubic metres of gas a day was flared at offshore installations. This represents a fall of about 16% over 1996.

8.12 Flaring at onshore fields was minimal during 1997.

8.13 Appendix 8 shows levels of gas flaring against oil production in recent years. Appendix 9 gives details of gas flaring from oil terminals and producing offshore fields.

OFFSHORE PIPELINES

8.14 During 1997 there were 38 submarine pipeline works authorisations for the construction and use of 597 additional submarine pipelines. As in previous years, the majority of these were infield flowlines associated with field development. The number includes: pipelines associated with the Eastern-Area Project (ETAP) project (interfield, gas and oil export lines); the Britannia gas export line which lands at St Fergus terminal; and pipelines for the new Schiehallion field in the Atlantic Frontier. Pipelines brought into use for the first time during 1997 included 17 interfield pipe-lines, all of these have been added to the list of oil and gas pipelines in Appendix 11.

8.15 1997 was also significant in seeing the start-up of the Foinaven field. Although only infield pipelines were involved, this development is important in that it is the first field to be fully commissioned in the deep waters of the Atlantic Frontier, West of Shetland.

Table 8.2 - Distillation Capacity of Refineries

To download this table click the appropriate format: Excel 4 or CSV file.

8.16 Major pipe-line developments under consideration at the end of 1997 included: the Shearwater - Elgin Area Line (SEAL) gas line, which will be the longest pipeline on the UKCS; and a gas export/import pipeline for the Alba platform, which will reduce flaring and provide a source of fuel gas in the future.

PRODUCTION AND DISPOSAL OF NATURAL GAS LIQUIDS

8.17 NGLs continued to be brought ashore with crude oil supplies via major terminals and also through the Far North Liquids and Gas System (FLAGS), Fulmar, Frigg (UK) and Scottish Area Gas Evacuation (SAGE) pipeline systems to St Fergus. Small amounts of NGLs are also brought ashore via the Central Area Transmission System (CATS) terminal, and through the Norpipe system, to Teesside.

8.18 Production of NGLs in 1997 was 8.1 million tonnes, including 1.9 million tonnes of condensates. All NGLs were produced offshore.

8.19 The largest single quantity of NGLs was piped to Mossmorran and Kerse of Kinneil for fractionation.

OFFSHORE INFRASTRUCTURE CODE OF PRACTICE

8.20 The voluntary industry-agreed Code of Practice has been in use since early 1996 and, by the end of 1997, 73 indicative tariff rates (40 for oil, 33 gas) had been published in Energy Trends. During 1997 the Department conducted an interim review of the Code. This involved asking companies with experience of tariff exchanges under the Code to provide feedback on its operation. Taken together, their responses suggest that the Code is generally working satisfactorily and has helped to bring some transparency to the process of negotiating third party access to infrastructure. The Department of Trade and Industry intends to discuss with the industry how best to proceed with the formal review of the Code after three years’ operation, envisaged when it was established.

REFINING IN THE UK

8.21 At the end of 1997 the refining industry in the UK consisted of 10 major and 4 minor refining units, one major unit less than at the end of 1996. The location of United Kindom Refineries are shown in Chart 8.4 and the address details of each Refinery can be found in Appendix 16. The industry has been and is indeed still going through a period of rationalisation to reduce operating costs and improve profitability. The merger of BP and Mobil in November 1996 which saw Mobil Coryton become a BP refinery, and the closure of Gulf’s Milford Haven refinery in December 1997 are examples of this. This rationalisation has been brought about because of three main problem areas.

a) In the late 1970’s demand for petrol was expected to grow strongly, and so the UK refining industry invested heavily in plant in order to increase their cracking capabilities with a view to producing more motor spirit. However, since 1990 demand has been decreasing, resulting in surplus production capacity. In addition, the growth in diesel and aviation fuel demand is putting pressure on the middle-distillate production capability, as both are produced from this part of the refining process. At this time it is unlikely that UK refiners will be able to meet future domestic demand. However, given the highly developed international market in petroleum products, the UK structural problem is not expected to create any domestic supply problems.

 

b)The surplus refining capacity has also led to poor profitability, particularly in the case of motor spirit, which has depressed spot prices. This is unlikely to improve in the short term as forecasts show only moderate increases in product demand being expected.

 

c) In addition to poor profitability the industry is now facing the problem of the increased investment necessary to meet new European Union environmental legislation, in particular the Auto-Oil programme which deals with reductions in emissions from motor vehicles.

Chart 8.4 - United Kingdom Refinery Locations as at 1 January 1998

8.22 At the end of 1996 UK refinery capacity per annum was: Distillation (vacuum) 93.5 million tonnes; reforming capacity 17.5 million tonnes and cracking /conversion 29.2 million tonnes. In terms of Distillation capacity, the refineries are rated as shown in Table 8.2.

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Title | Table of Contents
Chapter 1 | Chapter 2 | Chapter 3 | Chapter 4 | Chapter 5 | Chapter 6 | Chapter 7 | Chapter 8 | Chapter 9
Appendix 1 | Appendix 2 | Appendix 3 | Appendix 4 | Appendix 5 | Appendix 6 | Appendix 7 | Appendix 8
Appendix 9 | Appendix 10 | Appendix 11 | Appendix 12 | Appendix 13 | Appendix 14 | Appendix 15 | Appendix 16 | Appendix 17
Plate 1 | Plate 2W | Plate 2E | Plate 3W | Plate 3E | Plate 4W | Plate 4E | Plate 5W | Plate 5E | Plate 6 | Plate 7
Plate 8W | Plate 8E | Plate 9W | Plate 9E | Plate 10W | Plate 10E | Plate 11 | Plate 12