Why oil costs over $130 per barrel: the decline of North Sea Oil

[Barrett808]

Why oil costs over $130 per barrel: the decline of North Sea Oil
Posted by Euan Mearns on June 8, 2008 - 9:00pm in The Oil Drum: Europe



Rising North Sea oil production was a significant factor in keeping oil prices under control in the 1970s, 80s and 90s. Production peaked at 6.4 million barrels per day in 2000 and since then, declining North Sea Oil production is one significant reason that oil prices are now rising exponentially.

The UK

Crude oil, condensate and natural gas liquids (C+C+NGL) production. Source BP statistical review of world energy published 2007 with data up to 2006.

* UK oil production has two peaks and it is vitally important to understand that the reason for peak 1 in 1986 and peak 2 in 1999 are quite different, since many observers seem to think that production may begin to rise again as it did in the early 90s..
* Rising North Sea Oil production contributed to the oil price crash of 1986. Deferred investment resulting from this is the principal reason for decline in 1987. This was made worse by the Piper Alpha oil rig explosion of 1988. These are above ground factors.
* The all time high of 2.9 million bpd was reached in 1999. Decline that began in 2000 is caused by resource depletion and exhaustion of reservoir energy. It is no longer possible to bring on new small fields fast enough to compensate for natural decline and the trend that has now existed for 8 years will likely continue down as indicated.

From riches to rags

* The UK was an oil exporting country from 1980 to 2005. This had significant positive impact upon the trade balance. In 2006 production dropped below consumption levels and the UK once again became an oil importing country and will be an oil importer from now on.
* High prices will cause consumption to fall through conservation and pricing poor people out of the energy market. Thus it is difficult to forecast what the future consumption, production and price curves will look like. But by way of example, importing 200,000 bpd at $138 per barrel will add $10 billion per annum to the trade deficit.

(more)

http://europe.theoildrum.com/node/4112

[Muttocracy]

1. interesting - hadn't heard that angle on it

On top of China/India demand, political unrest various places, speculators...

[Zachstar]

2. People claiming speculators are the primary cause are in denial.

Yes they are assholes but there is only so many ships you can keep tied up in the harbor and so many warehouses you can rent before going into SERIOUS SERIOUS risk that not even a pro gambler would attempt.


This year we get story after story about failed rigs and failed production quotas. Areas on earth that ought to have EASY oil profits are not having trouble turning profits due to exploration costs.

I hate to admit it but unless gore had gotten fusion online by now I highly doubt we would see much difference by now. Maybe 110? 90 at the least due to massive conserve programs.

The simple fact is there is no more cheap oil. The only way to return to those days is for china to move to the moon and all SUVs converted to run on happiness.

[Champion Jack]

3. "all SUVs converted to run on happiness"

that's funny as hell, sounds like a good title for a book

[losthills]

4. Interesting, but it doesn't explain the problem.

[Zachstar]

5. Why? Does it have to be laced with conspiricy theories first?

[losthills]

6. How old are you?

[Zachstar]

7. Old enough to know that there is no conspiricy involved with these insane oil prices.