Deloitte: UKCS Activity Down 35% Overall in 2009

Offshore exploration and appraisal activity dropped by more than 35% throughout 2009, according to the latest oil and gas industry figures released by Deloitte.

The latest North West Europe Review, which documents drilling and licensing in the UK Continental Shelf (UKCS), reveals that during the last 12 months a total of 78 exploration and appraisal wells were spudded. This is a fall from 121 in 2008 as drilling levels slipped to those last seen in 2004.

The Deloitte review, produced by its Petroleum Services Group (PSG), highlights that exploration wells almost halved during 2009 and appraisals were down 25% on the year before In addition, during the final quarter of last year only 13 wells were spudded; 54% fewer than in Q3 and 38% fewer than Q4 2008.

This marks the lowest level of activity since Q2 of 2003. Throughout 2009 as a whole, the area which suffered most was the Northern North Sea with activity down 65% compared to the year before.

Activity also fell overall by 60% in the Southern North Sea while the Central North Sea saw a 47% decrease and the Moray Firth also witnessed a 26% decrease in new spuds. However, there was a rise in drilling activity in the West of Shetlands and the Atlantic margin with a 23% increase, while the first wells were also drilled in the East Irish Sea since 2005.

Graham Sadler, Managing Director of Deloitte’s Petroleum Services Group said, "These latest drilling figures are a clear reflection of the difficulties faced by the industry during 2009, both in terms of macroeconomic conditions and a number of industry specific issues such as rig availability and oil price volatility in the first half of 2009. Some drilling success around West of Shetlands and the Atlantic margin has stimulated a modest regional increase in activity."

Derek Henderson, Senior Partner for Deloitte in Aberdeen added, "In 2009 companies have needed to prioritise cost control and implement cash bolstering strategies to ensure they achieved as strong a financial position as possible during the recession.

"Although 2010 has heralded a much more positive outlook, the economy remains fragile and many energy firms will continue to implement those strategies that have served them well during 2009. Spending will remain cautious during 2010 and companies are likely to continue to carefully balance general economic conditions and their company's growth ambitions. Looking forward we would hope that less volatility in commodity prices and more stable operating conditions would improve confidence and overall activity levels."


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