Thursday, February 23, 2012

2011 UK Energy Figures – Oil and Gas Production Plummet but Low Carbon Generation Grows

Provisional 2011 UK energy figures have been released today by the Department of Energy and Climate Change (DECC). Conventional energy gives little cause for cheer with the news that the production decline in North Sea oil and gas has accelerated. On the positive side low carbon electricity generation has climbed, whilst total energy consumption had continued on its declining trend.

The energy consumption figures probably give most hope for environmentalists. UK energy demand has been falling now for over 5 years, although the economic downturn has done much to drive this trend. DECC’s figures show 2011 total energy demand was down a whopping 7% from 2010, however much of this was thought to be due to the mild weather and on a temperature adjusted basis the figure was a more modest (but still significant) 2%.

Low carbon generation also provided some good news. Wind’s share of generation by major power producers has grown from 2.4% to 4.0% since 2010 due to greater capacity and windier weather. Hydro is also up from 0.8% to 1.5%, largely due to more rainfall in Scotland where the majority of UK hydro is installed. These figures are dwarfed though by the low carbon king - nuclear generation - which accounts for 20% of UK electricity generation.

Conventional energy gave little cause for cheer though. Petroleum production was down by 17%, whilst gas production was down by an even greater 20%. Maintenance shutdowns, as well as general production decline, was behind these worrying figures. As a result the UK is becoming more and more reliant on energy imports, with Liquefied Natural Gas (LNG) shipped in from Qatar now at similar levels to pipeline gas from Norway.

Recent announcements that huge quantities of unconventional gas are lying under the UK will be welcome news then to the Government. But developing these resources via ‘fracking’ technology has a number of technical, regulatory, and (not least) public relations hurdles to jump, and it will be several years at least before significant quantities of gas begin to flow. In the mean time the UK looks set to be increasingly reliant on imported energy.

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