UK offshore drilling targeting higher resource levels in 2019

Exploration drilling offshore the UK this year should recover following the subdued activity across the sector in 2018.

Offshore staff

LONDONExploration drilling offshore the UK this year should recover following the subdued activity across the sector in 2018.

According toOil & Gas UK’s (OGUK) Business Outlook 2019, only eight exploratory wells were last year, the fewest since 1965, although four of the wells did lead to what appears to be commercial discoveries (Agar-Plantain, Garten, Glendronach, and Glengorm).

The total resources could be up to 485 MMboe, equivalent to 78% of the UK’s total produced volumes in 2018, and similar to the collective result delivered from 28 exploratory wells drilled offshore Norway over the same period.

This year OGUK expects up to 15 exploratory wells to be drilled in UK waters, some of which are high-impact, potential play-openers that could add more reserves than the total found last year.

Some could provide the materiality needed to justify investment in new production hubs such as the ‘Northern Gas Area’west of Shetland. There are also smaller gas opportunities nearby that might not justify a standalone development; but a success at, for example, Siccar Point’s Lyon well could galvanize a new gas hub.

Other wells to watch are Hurricane Energy/Spirit Energy’s wildcat on the fractured basementWarwick prospect west of Shetland which, if successful, could unlock other basement structures elsewhere on the UK continental shelf. Equinor’s Pip, Siccar Point’s Blackrock (now drilling), Chimera, Isabella and Ossian-Darach are others highlighted by the association.

At the same time, the report stresses the need for continued near-field exploration to sustain the viability of mature or new infrastructure, which is what Apache has been doing in the Beryl area of the central North Sea since 2015, with four successes.

Wells in this category planned for 2019 include Total’s Alwyn East in the UK northern North Sea and Equinor’s Bigfoot, close to the Mariner complex in the same area.

Last year OGUK counted nine UK offshore appraisal wells and estimates up to 12 more could follow across the sector this year. The first to spud was on Corallian Energy’s Colter field off the English south coast, 2 km (1.2 mi) from the Wytch Farm production complex: results so far appear to have been encouraging, with oil and gas shows.

Others are on Chrysaor’s Mabel discovery (spudded last month) and Equinor’s currentappraisal well on the Verbier oil field in the central sector. More could follow on Glendorm and Glendronach and on BP’s Achmelvich and Capercaillie, Azinor Catalyst’s Agar-Plantain, and Hurricane’s Lincoln.

Development drilling should stay constant this year, in line with last year’s total of 85 wells. OGUK expects 12-15 new projects to be approved that could collectively incur capital investments of £2.5-3.5 billion ($3.3-4.6 billion) and unlock 300-400 MMboe of resources.

Industry-wide initiatives have helped drive down UK offshore capex since 2014 from the peak of £10 billion ($13.15 billion) in 2014. OGUK expects levels to stabilize at around £7-7.5 billion ($9.2-9.9 billion) into 2020, when there may be a slight increase as new fields come onstream.


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