North Sea Rig Utilization to Reach New Heights This Year

While the North Sea may with reason be viewed as a mature region, recently released statistics without doubt show that the area is in fact nevertheless seeing a remarkable amount of activity and productivity.

North Sea rig utilization figures, made public this month, indicate the market is likely to remain buoyant through 2005, and some industry players go as far as saying that the North Sea will see a sustained renaissance in drilling activity.

Rig utilization ended 2004 up 13.1% from a year earlier at 81.7% in December, close to the September high of 84.1% and with every prospect of making further gains, according to Platts North Sea Letter data.

Forward utilization has apparently risen even more strongly, indicating the market is likely to remain buoyant through 2005. Excluding the remaining six cold-stacked semi-submersibles, both the semi and jack-up markets should come close to full effective utilization in the Summer.

"There are underlying factors which support the argument that the North Sea will see a sustained renaissance in drilling activity, such as changes in the ownership of assets, the upward revision by oil companies of long-term oil prices and the introduction of more flexible licensing terms," says Ross McCracken, North Sea Rig Market Editor. "Nevertheless, competition for resources has raised prices and this will eventually impact on exploration and production budgets".

The other key factors

Apart form the new wave of smaller companies that the region is attracting, make no mistake the large corporates are undertaking some very upbeat and positive activities. Whether it is upgrading or making new discoveries, many reputable companies, such as Statoil, are in fact extending field production life, and retaining viability and profitability in the region.

Another case in point, ExxonMobil Exploration and Production Norway, has participated in an extensive upgrade program at the Norwegian Sleipner West field that is expected to boost the estimated recoverable resources by approximately 350 million oil-equivalent barrels.

Technological developments

Contributing to the current activities in the area, is the latest in cutting edge technology combined with the latest in engineering techniques, which are being further developed and explored. It goes without saying that the objective of these initiatives is to retain viability and profitability in the region for as long as possible. Extracting the remainder of the North Sea oil reserves to extend field lifespan requires the latest ingenious, groundbreaking technology and innovative new techniques.

Over the last decade long reach horizontal drilling and 3-D seismic have made remarkable contributions to identifying and accessing deposits at relatively low cost.

Those in the know contend that future activity levels will to a large extent depend on whether technological progress continues.


Another key factor is co-operation. Co-operation across the UK/Norway international boundary, to secure maximum economic benefit from North Sea oil and gas reserves is gaining momentum. By working in partnership, particularly with regard to the UK and Norway, new and valuable opportunities can be opened up, and huge strides have been made in terms of consolidating and strengthening co-operation between the two countries.


Tax project finance and decommissioning taxation issues are pivotal issues, and legislative factors certainly have a major role to play in determining the future of this area.

"The UK Continental Shelf (UKCS) is entering a new, riskier phase of opportunity, and to fully realisz the potential on offer the right legislative, commercial and technical interests of all key parties must be as fully aligned as possible," James Pope, Director, Project and Structured Finance, Crédit Agricole Indosuez (CAI), based in London, commented at a previous EyeforEnergy North Sea Conference.

"Oil and gas finance is a core activity of our organization and CAI is very committed to expanding a successful entry into the UK upstream finance sector."

Decommissioning concerns

Then there is the decommissioning scenario. Up to 25 North Sea installations are apparently expected to be abandoned annually over the next 20 years! This in particular will be the emphasis at the third in EyeforEnergy's series of North Sea conferences, 'North Sea Decommissioning 2005', to take place in Aberdeen next week on January 26 and 27.

Word has it that over 40% of existing North Sea installations will come under consideration for decommissioning or abandonment in the next 10 years, and that this figure estimated to rise up to 85% over the next twenty years.

The 'North Sea Decommissioning 2005' Conference, organized by EyeforEnergy, a division of London-based First Conferences, will present a far-reaching and comprehensive investigation into the complex, and at times contradictory, North Sea scenario. It will provide North Sea industry players with a platform for debate, and amongst other topics will cover the latest technological improvements that are making the decommissioning process easier and cheaper, as well as financial and tax implications of decommissioning in the North Sea.

It will assist delegates with practical, first-hand advice on how best to cope with the numerous challenges presented by the changing circumstances in the region.

Should you require further information on the conference and decommissioning scenario, please contact: Saad Tayara, Event Director, EyeforEnergy at tel. + 44 (0) 207 375 7545, e-mail, or access

This article provided courtesy of EyeForEnergy