Capital spending and production remain high on the UK Continental Shelf but exploration activity is at a historic low.
Trade body Oil & Gas UK's said Tuesday that its latest Activity Survey highlights the contradictions currently at play in the UK offshore oil and gas sector. The organization said that while its survey showed that capital spending on the UK Continental Shelf remains high and that production on the UKCS last year was better than expected, the industry is facing its greatest challenge in 50 years when it comes to exploration.
The survey was published a day after the publication of Sir Ian Wood's report into how to boost production on the UKCS.
Oil & Gas UK's Activity Survey 2014 forecasts that capital expenditure in 2014 will be around $21.7 billion – the second biggest spending year on record after 2013's record $24 billion. Meanwhile, production in 2013 worked out at an average of 1.43 million barrels of oil equivalent per day – which, although 8 percent lower than that for 2012, was a significant improvement on the average yearly declined of 15 percent that was experienced between 2010 and 2012.
Production is also expected to pick up in 2014 and, with 25 new fields set to come on-stream over the next two years, is projected to rise to around 1.7 million boepd by 2018.
However, when it comes to exploration only 15 exploration wells were drilled in 2013 according to figures from the Department of Energy & Climate Change (DECC). This continued a downward trend from 2008, when 44 exploration wells were drilled.
Oil & Gas UK pointed out that exploration over the past three years has been at its lowest in the history of the UKCS. In 2013, exploration replaced just 80 million barrels of reserves.
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