The Courier & Advertiser (Perth and Perthshire Edition)
Optimistic signs in the North Sea
Drilling a black mark as activity on the UK Continental Shelf starts to improve
Confidence is returning to the UK oil and gas sector but low levels of drilling activity remain a major concern.
Industry body Oil and Gas UK said conditions in the North Sea had improved, with M&A (mergers and acquisition) activity in the basin topping $8 billion this year.
It said optimism on the UK Continental Shelf (UKCS) was further buoyed by the likelihood that a number of major new investment projects will be given the green light in the new year.
However, the group flagged flat levels of development drilling in the first nine months of 2017 as a cause for concern, with just 63 wells dropped in the period.
Mike Tholen, Oil and Gas UK’s upstream policy director, said the low level of drilling had to be addressed.
“Oil and Gas UK’s Wells Forum is working with the industry on a basin-wide performance improvement strategy which will help to make well construction a more efficient and cost-effective process.
“Success in our wells strategy will create a virtuous circle to help unlock more opportunities on the UKCS.”
Despite the issue, Mr Tholen said the wider picture for the North Sea was more positive.
“This year has been a very busy one for M&A activity which must be seen as a sign that confidence is returning to the basin,” he said.
“Now with Transferable Tax History in play, we expect that M&A activity will continue into 2018 as established players can more easily divest their noncore assets to companies better suited to invest in them and extend field life.
“Analysis shows that when an asset changes operatorship, average field life extension of nearly five years is achieved, and I am confident that trend will continue to shape the future of the UKCS.”