Mixed drilling trends off NW Europe, Deloitte finds

Offshore staff

ABERDEEN, UK -- Exploration and drilling has tailed off slightly on the UK continental shelf, but held steady or has risen elsewhere in northwest Europe according to the latest survey by Deloitte.

During the first quarter of 2011, Deloitte identified nine exploration and appraisal well spuds on the UKCS, a decrease of 25% compared with the previous quarter. Of the nine wells spud this year, five were in the central North Sea, two in the southern gas basin, one in the northern North Sea, and one on the Faroe-Shetland escarpment.

Despite the dip, Deloitte says the outlook was more positive until the government imposed its surprise tax increase on the sector in March. Various companies have since stated their intention to put appraisal and development projects on hold, although it is not clear how much this will impact drilling levels over the coming months.

During 1Q 2011, 10 UKCS exploration and appraisal wells were completed, four by EnCore and its partners in central block 28/9 to find or appraise the Varadero, Catcher North, and Burgman discoveries. Another of the completed wells was Maersk’s Culzean gas/condensate find in the same sector.

UK farm-in activity has risen, Deloitte says, with 13 farm-in deals announced in the first quarter of this year compared with eight in the previous quarter. The rising oil price could be an incentive for companies to increase their equities in reserves, or it could herald a return to corporate strategies that were in place pre-recession.

Offshore Norway, one appraisal and 12 exploration and appraisal wells spudded during the first quarter, the same as during the corresponding quarter in 2010. Eight of the 13 wells were in the North Sea, three in the Norwegian Sea, and two in the Barents Sea.

The outlook for the Norwegian shelf remains positive, Deloitte says. New production licenses were awarded in January under the latest pre-defined areas (APA) round. These, combined with the oil price, should sustain high drilling activity over the remainder of this year.

Of the 11 E&A wells completed on the shelf in the quarter, three were successful. Appraisal well 15/6-11 A intersected an oil column for Statoil on the Dagny/Ermintrude discovery, and well 24/9-10 S and its side track 24/9-10 A encountered oil at Caterpillar.

Off the Netherlands, three E&A wells were spudded during the quarter, compared with one in the corresponding quarter last year.

So far in 2011, four wells have been completed, of which two were drilled by GDF Suez in the K quadrant to target the Darcy prospect. Both resulted in technical failure after heavy mud losses were experienced while drilling though a fractured chalk horizon.

The Minister of Economic Affairs is inviting applications for an exploration license for Dutch North Sea block E/5, with bids due by June 7. One unnamed operator has so far applied.

04/08/2011



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