NW Europe Drilling Activity Holding Up Well

Article title
Deloitte's recent review of northwestern Europe's upstream industry reveals the UK had a dip in exploration activity in 2013 while the broader picture shows drilling across the region is holding up well.

At the end of January, business consultancy Deloitte's Petroleum Services Group released its year-end review for northwest Europe. The review details activity in 10 countries, but particularly focuses on the two leading oil and gas-producing nations in the region: the UK and Norway.

The report was cause for some concern among those involved in the oil and gas sector on the UK Continental Shelf (UKCS), mainly because of a significant decrease (28 percent) in exploration activity on the UKCS with only 47 exploration and appraisal wells drilled on the UKCS last year compared with 65 in 2012.

Trade organization Oil & Gas UK Chief Executive Malcolm Webb described these figures as demonstrating "the parlous state of exploration in the UK Continental Shelf. We are not drilling enough wells in UK offshore waters and those that we are drilling are not finding enough oil and gas."

However, on the positive side the UKCS saw a sharp increase in fields being brought into production – with 13 production start-ups taking place on the UKCS during 2013 compared with nine in 2012. Meanwhile, the UK awarded a record number offshore oil and gas exploration licenses when 219 licenses were awarded in the country's 27th offshore round in November – suggesting that strong interest remains in the North Sea as an exploration zone.

The broader picture for the whole of northwest Europe looks better still. Exploration activity on the UKCS in 2013 might have been significantly down compared to 2012, but on the Norwegian Continental Shelf (NCS) there were 42 exploration and appraisal wells drilled last year – a 41-percent increase on 2012. Indeed, a total of 121 exploration and appraisal wells were spud across northwest Europe in 2013 – which was only three wells fewer than the number of wells drilled in 2012.

In terms of licensing activity, Norway began 2013 by offering 40 companies shares in 51 new production licenses on the NCS after a record-breaking number of applications to its Awards in Pre-defined Areas (APA) 2012 licensing round. Meanwhile, Deloitte pointed out that both Denmark and Ireland have suggested that they will announce licensing rounds during the course of this year.

Deloitte's report concluded that levels of exploration and appraisal drilling across northwest Europe in 2013 were down only slightly compared to activity levels seen during 2012, while field development – particularly on the UKCS – has remained strong, mainly due to tax relief incentives.


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A former engineer, Jon is an award-winning editor who has covered the technology, engineering and energy sectors since the mid-1990s. Email Jon at jmainwaring@rigzone.com


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