Deloitte Sees Positive Year Ahead for UKCS Drilling

Exploration on the UK Continental Shelf is off to an encouraging start for 2012, a new Deloitte Petroleum Services report has said, with a marginal increase on activity on the same period for 2011.

The report says that while overall exploration and appraisal remains 66 per cent lower than in the same period in 2008 when there was last a spike in activity, this year sees an increase in activity of 22 per cent on activity for the same period last year.

The 22 per cent increase sees 11 wells spudded on the UKCS between the 1st of January and the 31st of March this year, indicating, Deloitte says, a more positive year ahead for gas and oil activity on the UK Continental Shelf. This prediction comes despite a  42 per cent drop in the number of wells spudded in the last five years and a 15 per cent drop on the number of wells spudded by the final quarter of 2011.

"The difference in activity between the last three months of 2011 and first quarter of 2012 is not altogether surprising," Graham Sadler, managing director of Deloitte’s Petroleum Services Group said. "The winter season restricts offshore activities and the number of commitment wells from the 25th and 26th licensing rounds is quite low. In addition, companies continue to be cautious in the face of an ongoing uncertain economic climate."

"However, more recent figures for March indicate an increase in drilling into the Spring with seven spuds in March compared to a total of four during both January and February. Furthermore, the tax relief measures announced by the Government in last month’s Budget have been welcomed by the industry and this may result in renewed confidence over the course of this year.  

"'It is still a little early to make predictions; however, the increased fiscal stability and the high oil price should lend themselves to an increase in drilling going forward. I would hope this slow and steady first quarter could mark the start of a positive upward trend for 2012."

The trends remained mixed across the rest of Europe but there too the UK Continental Shelf featured strongly, with farm-ins and asset acquisitions on the UKCS accounting for 60 per cent of North West Europe deals.