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January 08, 2006

IEA: UK Oil Production To Fall Short Of Demand 9/11, "War On Terror"  Iraq  Peak Oil

More on the worsening energy situation in the UK. As reported Friday, soaring natural gas prices have caused many British power stations and other gas users to switch to oil, and oil is now in short supply:

The Association of United Kingdom Oil Independents has told the government that its members had never experienced such protracted and widespread problems...Meanwhile, the Buncefield oil depot fire, the run on oil and other fuels due to cold weather, and a faster than expected rundown of North Sea supplies have caused chaos across the energy sector.

The underlying problem for the UK is that North Sea production has peaked and gone into steep decline (declining 10% in 2004 alone).

Now the International Energy Agency (IEA) estimates that starting next spring British production will no longer be able to satisfy British demand. The UK will become a net importer of oil for the first time since 1992, and as bad as their oil & gas situation is now, it's all downhill from here. The Scotsman (via Oil Drum):

The world's top energy watchdog has warned that the UK economy will become a net importer of oil this year for the first time in more than a decade — three years earlier than the government has predicted. [...]

The IEA sees UK oil demand for 2007 of more than 1.8m barrels per day, which it expects North Sea production will only be able to match for the first three months of the year.

Output is projected to fall to 1.65m barrels per day between March and June, and to 1.55m barrels per day between July and September, before rebounding slightly to 1.66m barrels per day in the last three months.

The government's more optimistic forecasts do not see the UK becoming a net importer until 2010.

Fyfe said: "In the last three years production has declined every year more than 200,000 barrels per day or more. We are looking at the slate of projects coming up and we are not factoring in any of the unexpected outages which have happened in the past few years."

The IEA's warnings raise the prospect that the government may turn out to be as badly wrong-footed by the decline of UK oil production as it was by the decline of UK gas — a failure which has put the UK on the edge of a gas crisis this winter.

A couple of things to note. First, crunch time came quicker than anyone expected — i.e., it doesn't pay to rely on rosy government projections. Second, if you were wondering why the UK — even though British public opinion overwhelmingly opposed the war — followed the US into the Middle East, the above provides a clue.

Posted by Jonathan at January 8, 2006 09:29 PM  del.icio.us digg NewsVine Reddit YahooMyWeb

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