Oil & Gas UK Activity Survey 2016

Exploration and Appraisal Drilling in 2015 The continued low rate of exploration and appraisal (E&A) drilling remains an area of serious concern. The number of exploration wells drilled fell to 13 in 2015, a record low on the UKCS. However, those wells that were drilled were relatively more successful than in recent years. Initial indications suggest that around 150 million boe were discovered, the highest in four years despite fewer wells being drilled. As in previous years, most of the exploration drilling was concentrated in the CNS region, although there was a notable pick-up in activity in the northern North Sea (NNS) with four wells drilled, the most since 2012.

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With such little recent exploration success, it was expected to be a slow year for appraisal drilling. While a total of 13 appraisals wells were drilled, ten of these were geological sidetracks.

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In total, just 26 E&A wells were drilled, the lowest in 45 years. This emphasises the need for further action to stimulate activity before critical infrastructure required to transport and process oil and gas is decommissioned. Given the global collapse in exploration expenditure, the UK will need to transform its competitiveness if it is to attract the funds it needs to sustain an appropriate rate of exploration. To replenish production, the annual number of E&A wells spudded will need to increase three to four fold. This will take concerted action by industry, government and the regulator to:

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• Apply the latest technological advances in seismic data aquisition and interpretation • Make better use of existing data by facilitating access across industry where possible • Improve access to finance

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• Continue to push for cost reductions, driven by falling rig rates and an initiative to halve well design costs • Evolve the fiscal regime to rapidly address the balance of risk and reward when exploring on the UKCS

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