Report underlines downturn in UK offshore activity
Forty wells were drilled offshore the UK last year, 10 fewer than in 2013, according to Deloitte’s Petroleum Services Group’s latest North West Europe Review.
ABERDEEN, UK – Forty wells were drilled offshore the UK last year, 10 fewer than in 2013, according to Deloitte’s Petroleum Services Group’s latest North West Europe Review.
Managing director Graham Sadler said: “Over the last 12 months, bothindustry and government have recognized the need for change on the UKCS. We have started to see some positive steps taken in that direction, with the recommendations made in the Wood Review and tax changes announced in the autumn statement among them.
“We continue to see steady but low levels of drilling and hope this will increase. However, that will require industry dialogue with, and strong guidance from, the OGA [Oil & Gas Authority]. It will also need further clarity from government over the fiscal incentives that will be made available to supportexploration and appraisal activity.
“To sustain its future, the North Sea’s stakeholders will need to adapt to a lower oil price environment and reduce costs in order to get through this period of transition.”
The report also noted a reduction in the number ofUK field start-ups to six in 2014, down from 13 in 2013.
Following theoil price slides, the values of many UK offshore asset values are likely to be revised. According to Derek Henderson, Deloitte’s Aberdeen office senior partner, “it is likely that if the oil price remains low assets will become more affordable to some of the region’s more cash-rich players who may be looking to invest in the UK basin.
“As a result, we could see more transactions in 2015 as some businesses look to divest and focus on other areas. This could also bring about further consolidation among some of the players in the market. There are definitely firms on the lookout for assets and deals will be done if the price is right.”