Offshore UK drilling on upward curve

Offshore staff

ABERDEEN, UKDrilling activity offshore the UK last year rose 33%, according to the latest survey by Deloitte’s petroleum services group.

Sixty-five exploration and appraisal wells were drilled across the UK continental shelf, up from 49 the previous year. The upsurge, Deloitte says, is in large part due to high oil prices and various incentives phased in by the government to stimulate fresh activity.

Last year also brought a surge in offshore asset wheeling and dealing, with 80 transactions completed in the UK sector, up 30% on the previous year’s total.

About 43% were outright purchases of fields, compared with only 14% of the 2011 UK transactions. This is another indicator of rising investor confidence, according to Deloitte.

Interest in UK field development reached a 10-year high. The Department of Energy and Climate Change granted approval for 21 new field projects and eight projects that involve investment in older fields for redevelopment. More than 90% of new field developments in the UK were eligible for tax allowances following measures introduced in the 2012 budget last March.

Derek Henderson, energy partner for Deloitte in Aberdeen, said: “North Sea oil and gas production may have passed its previous zenith, but in the recently announced tax reliefs, the UK government has what appears to be a useful strategy to manage the decline in North Sea’s reserves.

“This creates what every industry sector needs – confidence – and investment in developing new fields and delivering production will benefit from the kind of environment which we are currently experiencing.”

1/18/2013

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