Positive signs for UK North Sea drilling prospects

North Sea drilling activity will remain steady over the rest of this year, predicts the latest survey by Deloitte’s Petroleum Services Group (PSG).

Offshore staff

ABERDEEN, UKNorth Sea drilling activity will remain steady over the rest of this year, predicts the latest survey by Deloitte’s Petroleum Services Group (PSG).

Over the UK sector, 16 exploration and appraisal wells were drilled during 2Q 2013, seven above the total in 1Q. Across northwest Europe as a whole, 35 new exploration and appraisal wells were drilled, 10 more than in 1Q.

The area has seen an increase in farm-in deals to assist with drilling or development costs. Farm-ins accounted for about 70% of the total northwest Europe deal landscape during 2Q.

Graham Sadler, managing director of Deloitte’s PSG, said the increase was partly due to the number of smaller companies operating in the North Sea, with majors continuing to focus on less mature areas. “Farm-ins allow smaller companies to benefit from pooling resources and equipment such as drilling rigs, enabling them to access existing North Sea reserves.”

Development activity, too, has remained strong in recent months, with six fields granted development approval and fourcoming onstream offshore the UK and Norway.

The survey adds that innovative technologies is facilitating developments that would otherwise be uneconomic, further incentivizing exploration and development of the area.

Graeme Sheils, energy partner at Deloitte in Aberdeen, said: “This quarter’s stable drilling figures should not detract from the fact that the UKCS is experiencing high activity levels. The market is currently buoyed by a number of factors including a stable oil price, increasing investment, and government incentives. With a more positive domestic outlook also beginning to emerge across the rest of the UK, there is a lot of confidence in the outlook for the North Sea sector.

“Frontier areas such asoffshore west of Ireland are also attracting attention, where the industry awaits the results of the Dunquin well. The highly anticipated results of this exploratory well could spur further activity, with a number of companies already having farmed-in to offshore acreage this year.”

7/19/2013

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