Offshore Oil & Gas

 Published On: Oct, 2014 |  Published By: Key Note | Format: PDF
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Introduction & Definition

REPORT COVERAGE
This Key Note Market Report examines the UK offshore oil and gas industry, covering the exploration, production and delivery of oil and gas to coastal processing and storage facilities. In the UK, the production of offshore oil and gas relies on reserves located in the North Sea surrounding the British Isles known as the UK Continental Shelf (UKCS). The UKCS refers to the areas of the sea bed and subsoil beyond the territorial sea over which the UK exercises sovereign rights of exploration, exploitation and development of natural resources. The Department of Energy & Climate Change (DECC) is responsible for petroleum licensing and the regulation of the upstream oil and gas sector. It is also responsible for decommissioning offshore oil and gas installations.

MARKET SECTORS
The products covered in this report are defined as petroleum products, a definition which covers a complex mixture of naturally occurring hydrocarbons that can be solids, liquids or gases. There are extensive hydrocarbon reserves in the UKCS as a result of geology in which oil, gas and other compounds have penetrated porous rock that has been sealed by impermeable rock beneath the seabed. The most common form of liquid petroleum is crude oil. The two primary sectors that are analysed in this report are:
oil
natural gas, including liquefied natural gas (LNG).

Oil
Oil is a vital feedstock material in the production of fuels, petrochemicals, plastics and many other products. The basic product is crude oil, a mineral comprised of a mixture of naturally occurring hydrocarbons with a variable density, viscosity and colour (usually ranging from black to yellow). If exposed to air, crude oil can acquire the appearance of heavy tar.

Other important features of crude oil relate to its gravity and sulphur content. Oil derived from the UKCS has been developed into a crude oil benchmark, or oil marker, in the form of Brent crude; Brent crude has its own trading price and many other fuels are priced at a discount or premium based on this form of oil, dependent on the quality of the fuel.

Following extraction, crude oil is processed at refineries to create fuel, energy or petroleum-based products. The majority of oil is refined to produce fuel for road vehicles and aircraft.

Natural Gas
Natural gas is found either in isolation or alongside crude oil and is formed of a mixture of naturally occurring gases. The gas is comprised primarily of methane, although ethane, propane, butane, hydrogen sulphide and carbon dioxide (CO2) may also be present; these, however, are generally removed at or near the well head in gas processing plants. As previously mentioned, LNG is also covered in this report; LNG is a natural gas that has been converted into liquid via cooling in order to increase efficiency in transportation, as liquefaction greatly reduced the volume of gases. Once it reaches its destination, the liquid is regasified via heating and then readied for distribution.

Natural Gas Liquids
Natural gas liquids (NGLs) are a mixture of liquids derived from natural gas and crude oil during the production process. NGL can be comprised of propane, butane, ethane and gasoline components.

Executive Summary
This Key Note Market Report analyses the UK upstream oil and gas sector, encompassing the exploration and production of oil and gas, and its delivery to coastal processing and storage facilities. Products covered in this report are: oil, natural gas and natural gas liquids (NGLs). The UK offshore oil and gas industry relies on reserves located in the North Sea surrounding the British Isles, known as the UK Continental Shelf (UKCS), with 99% of the UKs oil and gas production coming from the UKCS.

Introduction & Definition 1
REPORT COVERAGE......1
MARKET SECTORS.........1
Oil.......1
Natural Gas..2
Natural Gas Liquids..........2
1. Executive Summary 3
2. Whats KEY in the Market? 4
KEY DRIVERS........4
MARKET TRENDS4
Oil.......4
Crude Oil Production.......4
Table 2.1: Crude Oil Production from Major Oil Fields
(000 tonnes), 1975-2008, 2009, 2011 and 2013......5
Distillation Capacity.........6
Table 2.2: UK Refinery Processing Capacity (million tonnes per annum), 2013.....6
Gas ....6
Gas Production......7
Table 2.3: Gross Gas Production from Major Gas Fields
(million cubic metres), 2008, 2011 and 2013..........7
ECONOMIC TRENDS......8
Table 2.4: UK Economic Trends (000, m, %, million and ), 2009-2013......9
KEY CURRENT ISSUES.11
UKCS Production Continues to Decline......11
Exploration Drilling Falls to Record Low....11
Decommissioning the UKCS....11
Shale Gas Exploration...12
HOW ROBUST IS THE MARKET?...12
3. Market Size, Segmentation & Forecasts 13
MARKET SIZE & SEGMENTATION.13
The Total Market13
UK Oil and Gas Reserves and Resources ....13
Table 3.1: UK Oil and Gas Reserves and Resources (million tonnes and billion cubic metres), 2008-2012....14
By Value ....16
Table 3.2: The Value Balance of Traded Energy of UK Indigenous Oil and Gas Production (m), 2009-2013....16
Table 3.3: Taxes and Royalties Attributable to UK Oil and Gas Production by Value (m), Years Ending 31st March 2004-2014.17
By Volume.18
Table 3.4: UK Production of Petroleum and Natural Gas by Volume (million tonnes of oil equivalent), 2009-2013.......19
Market Sectors.....20
Oil.....20
Table 3.5: The Value Balance of Traded Energy of UK Indigenous Crude Oil
Production (m), 2009-2013....20
Table 3.6: UK Production of Petroleum Oil by Volume (million tonnes of oil equivalent and %), 2009-2013....21
Gas....22
Table 3.7: The Value Balance of Traded Energy of UK Indigenous Natural Gas Production (m), 2009-2013....22
Table 3.8: UK Production of Natural Gas by Volume (million tonnes of oil equivalent and %), 2009-2013....23
MARKET POSITION......24
The UK........24
Table 3.9: UK Production of Primary Fuels by Type of Fuel by Volume (million tonnes of oil equivalent), 2009-2013.......24
Table 3.10: UK Production of Primary Fuels by Type of Fuel by Volume (million tonnes of oil equivalent and %), 2009 and 2013.......25
Figure 3.8: UK Production of Primary Fuels by Type of Fuel by Volume Share (%), 2009 and 2013.........27
International Perspective.........27
Oil ....27
Table 3.11: Global Proved Oil Reserves by Region (billion tonnes, billion barrels and %), 2013........28
Table 3.12: Global Oil Production by Region (million tonnes and %), 2013........30
Table 3.13: Global Oil Consumption by Region (million tonnes and %), 2013 ..31
Natural Gas ..........32
Table 3.14: Global Proved Reserves of Natural Gas by Region (trillion cubic metres and %), 2013.....32
Table 3.15: Global Natural Gas Production by Region (billion cubic metres and %), 2013...33
Table 3.16: Global Gas Consumption by Region (billion cubic metres and %), 2013...35
OVERSEAS TRADE........36
Exports........36
Oil.....36
Table 3.17: UK Exports of Crude Oil by Value (m), 2009-2013........36
Table 3.18: UK Exports of Primary Oils by Volume (000 tonnes), 2009-2013........36
Table 3.19: UK Exports of Crude Oil by Destination by Volume (000 tonnes), 201337
Natural Gas38
Table 3.20: UK Exports of Natural Gas by Value (m), 2009-2013....38
Table 3.21: UK Exports of Natural Gas by Energy Volume (gigawatt hours), 2009-2013..38
Table 3.22: UK Exports of Natural Gas by Country of Destination by Volume (000 tonnes), 2013.........39
Imports ......39
Oil.....39
Table 3.23: UK Imports of Crude Oil by Value (m), 2009-2013........40
Table 3.24: UK Imports of Primary Oils by Volume (000 tonnes), 2009-2013.......40
Table 3.25: UK Imports of Crude Oil by Country of Origin by Volume (000 tonnes), 201341
Natural Gas ..........41
Table 3.26: UK Imports of Natural Gas by Value (m), 2009-2013....42
Table 3.27: UK Imports of Natural Gas by Volume (gigawatt hours), 2009-201342
Table 3.28: UK Imports of Natural Gas by Country of Origin by Volume (000 tonnes), 201343
FORECASTS.........43
Future Trends.......43
UKCS Expenditure .........43
Table 3.29: UKCS Development Capital Projections (bn), 2014-2018........44
Other Trends .......45
The Economy .......45
Table 3.30: Economic Forecasts (000, % and million), 2014-2018.....46
Forecast Total Market...46
Oil ....46
Table 3.31: Forecast UK Production of Petroleum Oil by Volume (million tonnes of oil equivalent), 2014-2018.......47
Gas ..47
Table 3.32: Forecast UK Production of Natural Gas by Volume (million tonnes of oil equivalent), 2014-2018......48
Market Growth.48
Figure 3.17: Growth in UK Production of Petroleum Oil by Volume (million tonnes of oil equivalent), 2009-2018.......49
Figure 3.18: Growth in UK Production of Natural Gas by Volume (million tonnes of oil equivalent), 2009-2018......49
4. Competitor Analysis 50
MARKET LEADERS.......50
BG Group PLC .....50
BP PLC.........50
Centrica PLC ........51
Chevron North Sea Ltd..52
ConocoPhillips (UK) Ltd53
Royal Dutch Shell PLC....54
Total E&P UK Ltd.55
OTHER COMPANIES....55
Apache Corp.........55
BHP Billiton Group.........56
Canadian Natural Resources...56
ExxonMobil56
Hess Corp...56
Maersk Oil.56
Marathon Oil Corp.........57
Nexen Inc...57
Perenco......57
Talisman Energy Inc.......57
NUMBER OF COMPANIES....58
By Turnover..........58
Table 4.1: Number of VAT- and/or PAYE-Based Enterprises Engaged in the Extraction of Crude Petroleum and Natural Gas by Turnover Sizeband (000), 2013.......58
By Employment....58
Table 4.2: Number of VAT- and/or PAYE-Based Enterprises Engaged in the Extraction of Crude Petroleum and Natural Gas by Employment Sizeband (000), 201359
KEY TRADE ASSOCIATIONS.59
5. Buying Behaviour 61
ENERGY CONSUMPTION .....61
Energy Consumption of Primary Fuels .......61
Table 5.1: UK Inland Energy Consumption of Primary Fuel by Type of Fuel (million tonnes of oil equivalent), 2009-2013..........61
Fuel Used in Electricity Generation..62
Table 5.2: Fuel Mix Used in Electricity Generation by Volume (million tonnes of oil equivalent and %), 2013...62
Table 5.3: Electricity Plant Capacity by Type of Plant (megawatts), 2009-2013...63
Energy Use of Petroleum Products ..64
Table 5.4: Energy Uses of Petroleum Products by Volume (000 tonnes and %), 2013.......64
NON-ENERGY USES OF PRIMARY FUELS..........65
Table 5.5: Inland Deliveries of Petroleum Products for Non-Energy Uses by Volume (000 tonnes), 2013.....65
GAS APPLICATIONS.....66
Table 5.6: Natural Gas Demand and End-Use of Gas by Volume (gigawatt hours), 2013...66
6. Strengths, Weaknesses, Opportunities & Threats 68
STRENGTHS.........68
WEAKNESSES.....68
OPPORTUNITIES68
THREATS...69
7. PESTEL 70
POLITICAL 70
Scottish Referendum ....70
Maximising the UKCS....70
ECONOMIC ........71
Table 7.1: Business Sentiment Index in the UK Oil and Gas Industry, Q4 2012-Q1 2014.71
SOCIAL .....72
TECHNOLOGICAL ........72
Carbon Capture and Storage .72
Digital Oil Field....73
ENVIRONMENTAL ......73
Environmental Liability Directive......73
LEGISLATIVE ......74
8. Further Sources 75
Associations........75
Publications........75
Government Publications ...75
Key Note Research 77
Understanding Consumer Survey Data 78
Number, Profile, Penetration........78
Social Grade........79
Standard Region..........79
The Key Note Range of Reports 80 

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