Deloitte: Drilling activity up 64% on UK Continental Shelf
LONDON - Offshore drilling activity on the UK Continental Shelf (UKCS) rose 64% during the second quarter of 2012 compared to the same period last year, according to industry figures released by Deloitte.
The report, which documents drilling and licensing across North West Europe between April 1 and June 30, shows 18 exploration and appraisal wells were drilled on the UKCS during the period. This also represents a 64% increase on the first quarter of 2012.
With deal activity in the UK also rising 47% this quarter, compared to Q2 last year, and an increase in field development approvals and start-ups, the outlook for the UK oil and gas industry is positive, the report says.
“We traditionally experience a rise in activity during the summer months, however this year’s spur of activity reflects a higher year-on-year increase.” said Graham Sadler, managing director of Deloitte’s Petroleum Services Group. “We have some way to go before we are back to the levels seen in 2009 and 2010, however the positive announcements in the Government’s March Budget with regards to the extension and change in field tax allowances should encourage further exploration, appraisal and development activity. Furthermore, the announcements made to provide more certainty on the decommissioning tax relief, if implemented, should allow companies to recover cash flow previously tied up in financial guarantees for further investment across the UKCS.
The report indicates a mix of companies in the North Sea making use of the Government’s March Budget announcement, with a number of deals focused on new and existing discoveries, as well as deals involving fields under development or fields that are already producing.
The number of field start-ups occurring in the first half of 2012 also shows positive signs for the industry. So far in 2012, across the North Sea, eight new fields have come onstream. This is higher than the total number of field start-ups seen during 2011 and more than double those seen in 2009 and 2010.
Added to this, the number of fields being approved for development by the UK and Norwegian governments has been increasing over the past three years. In 2009 only eight fields were awarded development approval and last year a total of 18 projects were granted approval.