Deloitte: North Sea drilling forecast optimistic as positive trend continues in Q2
BY MELANIE CRUTHIRDS, News Editor
LONDON -- North Sea drilling activity remains steady, with a positive forecast for the next two quarters, according to a new report into offshore activity from business advisory firm Deloitte.
The report, compiled by Deloitte’s Petroleum Services Group (PSG), found that, although the number of new wells drilled on the UK Continental Shelf (UKCS) has fallen slightly in comparison to the same period last year, the level of exploratory activity remains healthy.
A total of 16 exploration and appraisal wells were drilled in the UK during the second quarter of 2013, seven more than during Q1, but two fewer than the same period last year. Despite the slight fall on 2012’s figures, Q2 2013 has still produced two more new wells than the quarterly average since the end of 2011, a year which saw the lowest activity since 2003. Across northwest Europe as a whole, 35 new exploration and appraisal wells were drilled, 10 more than in Q1, but only matching the second quarter of 2012.
Graham Sadler, managing director of Deloitte’s PSG, said the latest figures are in line with what would be expected from a mature region, such as the UKCS.
One of the notable features of Q2’s report is the significant increase in farm-in style agreements, where one company takes a stake in another company’s field, often to assist with drilling or development costs. Farm-ins accounted for around 70% of the total northwest Europe deal landscape during Q2. A total of 30 deals were completed in the region, slightly down from the 35 that were completed during the same period last year.
Development activity is also holding strong, according to the report, with six fields being granted development approval, and four actually coming onstream across UK and Norwegian waters. Although the number of fields coming onstream in the UK (three) is down on the same period in 2012 (five), innovative technologies mean that previously “sub-commercial” developments, those which might not have been considered economically viable, are beginning to provide real prospects, further incentivizing the exploration and development of the area.
Although the North Sea has seen a very slight decrease in the number of new exploration wells being drilled this quarter, the future remains bright across the region.
Deloitte’s Petroleum Services Group (PSG) produced the Drilling and Licensing Review quarterly from which this information was drawn. The report provides detailed information on proposed new and completed wells, and an overview on all licensing and deal activity in northwest Europe. The analysis contained within the latest review (Q2 2013) is a summary of activity between April 1 and June 31, 2013.