Sector reviews may account for drop in UK offshore drilling
Exploration drilling activity continues to slide across the UK continental shelf (UKCS), according to the latest review by Deloitte’s Petroleum Services Group (PSG).
The 2Q 2014 report identified seven exploration and appraisal (E&A) wells drilled on the UKCS, down from 12 in the previous quarter and 17 in 2Q 2013.
No farm-ins were reported to UK assets during the quarter, PSG added.
Derek Henderson, senior partner in Deloitte’s Aberdeen office, said rising operating costs have impacted investment decisions. “It’s no secret that the costs facing oil and gas firms on the UKCS have been a significant issue for some time now… Research suggests it’s now almost five times more expensive to extract a barrel of oil from theNorth Sea than it was in 2001…
“In addition, with the fiscal regime under review, it’s quite likely that the industry will be waiting until there is a bit more clarity over how this will take shape. Thetax environment is a factor that bears heavily on the decisions of all oil and gas companies, especially with corporate tax rates that vary and can reach 81%.”
In Deloitte’s recent poll of the industry, the overall level of tax drew the largest response concerning issues facing the UKCS (46% of respondents).