Economic Report 2013

New Developments • Nine new fields came on-stream, bringing 146 million boe into production. • DECC approved 21 new projects, as well as eight substantial, incremental redevelopments. • 55 per cent of fields approved in the last five years havebeenorwill bedevelopedas subsea tie-backs to existing infrastructure. Drilling Activity • The number of wells drilled (including sidetracks) was: o 26 exploration wells o 25 appraisal wells o 122 development wells • Whilst drilling figures improved from 2011, they are still below the average for the last ten years. They need to rise further to avoid losing substantial potential reserves from the UKCS as infrastructure starts to be decommissioned. • Exploration drilling is expected to pick up further in 2013 with 37 wells planned for the year. • Appraisal drilling of 18 to 20 wells is expected in 2013.

Employment • The industry supported some 450,000 jobs, many highly skilled, across the whole economy, with: o 36,000 employed by operating companies (12,500 of whom worked offshore)

200,000 employed in the supply chain (45,000 of whom worked offshore) 112,000 in jobs induced by the economic activity of the above employees 100,000 in the export of goods and services

o

o

o

Decommissioning • Some 475 installations, 10,000 kilometres of pipelines, 15 onshore terminals and 5,000 wells will eventually have to be decommissioned. • Decommissioning expenditure was around £500 million and that is likely to rise to an average of £800-1,000 million per year during the rest of this decade. • From 2013 through to 2040, £31.5 billion is forecast to be spent on decommissioning of existing assets. • Newinvestment inprobabledevelopments would add £3.5 billion to the total, although much of this will be incurred after 2040.

Editorial Notes: • A Glossary of Terms and Abbreviations is included in the Appendix. • The drafting of this report was undertaken during June and July 2013.

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ECONOMIC REPORT 2013