Report from Deloitte suggests drilling in first three quarters of 2012 just 6% off 2011 total
Drilling activity in the UK North Sea is on target to surpass last year's totals, according to a new report by accountant Deloitte.
Deloitte's third quarter North West Europe review suggests drilling activity in UK waters in the first three quarters of 2012 exceeded the same period last year with 10 more wells drilled and is just six per cent off the total number of wells drilled during 2011.
And the number of fields in the UK continental shelf (UKCS) granted development approval in the first nine months of 2012 has surpassed the 2011 total.
In 2011 the Department of Energy and Climate Change (DECC) awarded development approval to 12 fields and sanctioned five incremental projects.
So far this year the DECC has approved 15 field development projects and six incremental projects.
Across north west Europe a total of 101 deals have been reported so far, up 15 per cent year on year, with 64 of those deals coming from activity in UK waters – five per cent more than the total reported for 2011 when 61 deals were reported.
A total of seven fields have come onstream this year in the UK continental shelf – three oil, two gas and two condensate fields – compared with a total of five fields coming onstream in the 2011 year.
Of the seven new fields which have come online this year, five have qualified for tax relief through the small field allowances announced in the Chancellor's Budget in March.
The Cygnus gas field off the coast of Lincolnshire is also eligible for the newly introduced shallow water large gas field allowance.
In Norway, drilling activity dropped 44 per cent in the third quarter on a year ago. The Norwegian Government approved no new field developments and no new production began in the quarter.
The number of wells drilled in Norwegian waters over the three quarters of 2012 is lagging by almost 50 per cent compared to the total number of wells drilled in 2011, Deloitte said, with 41 wells spudded in the first three quarters of 2011 compared with 27 so far this year.
Graham Sadler, managing director of Deloitte’s petroleum services group, said: “We’re still not seeing pre-recession levels of activity, but there’s a definite feeling of some confidence coming back to businesses operating in the UKCS.”
“The Government’s efforts to stimulate activity through a series of tax relief schemes are starting to filter through and, along with a sustained high oil price, smaller and technically challenging fields continue to be a much more attractive investment proposition than might have otherwise been the case.”