ECONOMIC REPORT
2016
32
Development Drilling
Given that development wells are drilled with the intent of producing oil and gas, it is unsurprising to see the
strong correlation (0.9) between development wells spudded and production, as shown in Figure 19. Therefore,
the rate of drilling can be used as a strong leading indicator of production.
The rate of development drilling held up very well through the first half of the decade, with 120 to 130 wells
spudded in each of the last six years and this has contributed towards stabilising production over the last two to
three years.
Figure 19: Development Drilling versus Production
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
0
50
100
150
200
250
300
350
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Production (Billion boe)
Development Wells Spudded
Development Wells
Production
Source: BEIS, Oil & Gas UK
However, there has been a sharp fall in the number of development wells drilled over the last three quarters, as
shown by Figure 20 opposite. Forty-two development wells were drilled in the first half of this year pointing to
an anticipated fall of up to 30 per cent this year against the 129 development wells drilled during 2015. Fewer
producing wells are expected to be drilled this year than in any year since the 1970s, adding to the threat of
another production collapse towards the end of the decade.
Fewer producing wells are expected to be drilled
this year than in any year since the 1970s.