UK primary energy production continues to fall

 

Decline was experienced across all primary energy sectors.

 

Oil and gas output plunged as output facilities were affected by maintenance issues alongside long-term decline, due to the maturity of UK North Sea oil and gas operations. Gross natural gas production fell 6.2% in 2013, reflecting a long-term decline in UK natural gas production, which has fallen 8.0% per year on average since 2000 when production peaked.

 

Crude oil (including NGLs) production was 8.8% lower in 2013 than 2012, at 41mn tonnes – a 70% decline in oil production from its 1999 peak. The key source of crude oil imports last year was Norway, which accounted for 40% of imports, followed by large growth in imports from Algeria and Saudi Arabia. Norway was also the key source of gas, accounting for 58% of UK imports, with 16% from the Netherlands. LNG accounted for 20% of gas imports, down from 28% in 2012, with 93% imported from Qatar.

 

Energy imports were at record levels in 2013, up 2.3% on 2012. In 2013, the UK became a net importer of petroleum products for the first time since 1984 (the year of the miner’s strike) and before that 1973 – the time of OPEC’s first major price hike. Refinery production fell 6% in 2013 compared with 2012 and 25% on 2000. Imports of petroleum products rose 8% to make up the shortfall, whilst exports decreased by 3%. Imports increased, largely due to the closure of the Coryton refinery in July 2012, and were also impacted by temporary closure of the Grangemouth refinery in October 2013.

 

The UK sources petroleum products widely. Diesel road fuel was sourced from a range of European countries. Aviation fuel was also sourced widely, with significant volumes from Kuwait, Saudi Arabia and other OPEC countries. However, the UK remains a net exporter of petrol, shipping 35% of exports to the US.

 

UK coal production plummeted 25% in 2013 compared to 2012, following the closure of a number of mines. Russia became the key source for coal, accounting for 41% of UK imports, followed by the US and Columbia, which accounted for 25% and 23% respectively.

 

The UK remained a net importer of energy, with an increased dependency level (imports/energy use) of 47%. According to the Digest, this continues the trend from 2004 when the UK once again became a net importer of fuel. In 2013, the UK became a net importer of all fuels, as total imports of petroleum products exceeded exports.

 

UK primary energy consumption continued to fall by 0.6% in 2013. On a temperature adjusted basis, consumption was down 1.9%, continuing the downward trend of the last eight years, due to increased energy efficiency and industrial decline during the economic recession.

 

Overall gas demand fell by 1.1%, while gas demand for electricity generation decreased by 5.7% as gas’ share of the UK’s generation of electricity fell to 27% from 28% last year. Domestic gas demand was similar to that in 2012.

 

Total oil consumption in the UK saw a small fall of 1% compared with 2012. Over 70% of oil was consumed in the transport sector, which showed little change in overall consumption from 2013. Consumption of diesel road fuel exceeded motor spirit consumption by over 9mn tonnes in 2013. Up till 2005, motor spirit sales exceeded diesel road fuel sales. Since then a large proportion of the UK’s car fleet has switched to diesel. Petrol consumption fell by about 4% per year in the past 10 years, while diesel use has increased by about 2% per year over the same period.

 

Energy consumption by final users rose 0.7% in 2013 at 142.5mn toe. Consumption in the domestic sector was broadly unchanged, up only 0.2%, with industry and service sector use up 2.4% and 3.1% respectively. Transport consumption fell 0.7%.

 

On a temperature adjusted basis final energy consumption was down by 0.3% continuing the downward trend of the last nine years.