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ACTIVITY SURVEY
2015
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Figure 4 shows industry’s key performance metrics in 2014 against forecasts made 12 months ago.
Figure 4: Key Metrics Scorecard for 2014
Exploration and Appraisal Drilling in 2014
In February 2014, based on operators’ forecasts, Oil & Gas UK anticipated that 36 exploration and appraisal (E&A)
wells would be drilled with the majority (25) being exploration. Although 32 E&A wells were drilled, the dynamic
was not as expected, with more appraisal wells drilled than exploration.
Despite hopes of an upturn, exploration drilling activity failed to recover with just 14 exploration wells drilled
(including sidetracks) last year. The current rate of exploration drilling is the lowest since 1965 and urgent action is
required to stimulate activity in this area and generate future development opportunities. There were a number
of factors that meant 11 wells failed to materialise in 2014, although nine of them are still planned but slipped
into 2015 or later. The key constraints were inability to secure finance, lack of affordable rigs and cost escalation.
Furthermore, exploration drilling continued to yield disappointing results. Whilst half of the wells drilled
encountered hydrocarbons, only four were reported as sufficiently attractive to potentially be developed. These
four discoveries contain combined recoverable reserves of around 50 million boe, which represents a third
successive poor year for exploration volumes discovered, particularly when compared to the annual average of
over 250 million boe over the last ten years.
Ongoing initiatives to try and improve the success of exploration drilling include: plans to initiate new seismic
data acquisition in the UKCS’ frontier regions; the creation of a digital exploration map illustrating new, previously
unexplored and near-field opportunities; a conference for exploration specialists to share information and best
practice; and a review of 97 wells in the central North Sea (CNS). In addition, the impact of the fiscal regime on
exploration is being reconsidered, not least in light of the Wood Review and the recently completed fiscal review.
Appraisal drilling, on the other hand, exceeded expectations in 2014. Eighteen wells were drilled, seven more than
were forecast. It is hoped that appraisal activity will encourage further resources to be matured.
Forecast
Actual
Exploration Wells
25
14
Appraisal Wells
11
18
Production (Million boe per day)
1.4-1.5
1.42
Expenditure (£ Billion)
•
Capital Expenditure
•
Operating Expenditure
•
Exploration and Appraisal
•
Decommissioning
25
13
9.6
1.4
1
26.5
14.8
9.6
1.1
1
Unit Operating Cost (£/boe)
18
18.5
Source: Oil & Gas UK