Activity Survey 2015

Appraisal Drilling An average of over 50 appraisal wells per year were drilled on the UKCS from 2005 to 2008, driven by a steady growth in exploration activity over the preceding decade. Appraisal activity fell thereafter to an average of around 30 wells per annum between 2009 and 2013, before falling sharply in 2014 with just 18 appraisal wells drilled. Many of these recent wells were targeting old discoveries made in previous decades. At this point, the outlook for 2015 is bleak with just five appraisal wells forecast for the year. It appears that this trend is driven by the relatively poor rate of exploration over the last four years, leading to fewer discoveries and hence fewer appraisal opportunities. It is also the case that small discoveries, typical of those seen in recent years, are less able to bear the costs of an appraisal well, further suppressing activity. Appraisal drilling will only pick up when it becomes a more attractive option both as well costs fall and the post-tax value of the discovery is improved. However, without appraisal, many discoveries will fail to meet investment screening criteria and will not progress to development.

1

2

3

4

Figure 12: Appraisal Well Count and Forecast

5

90

80

6

70

Appraisal Sidetracks Appraisal Wells

60

50

7

40

30

8

20

10

Number of Wells Drilled including Sidetracks

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Source: Oil & Gas UK, DECC

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