Business Outlook 2018
Exploration Drilling Just 14 exploration and 9 appraisal wells were spudded last year, which is in line with the average of the last five years. On one hand, it is commendable that drilling rates have been maintained in the UK through a period when global expenditure on exploration activity has fallen by 60 per cent – this demonstrates the improvement in competitiveness of UK prospects versus their global peers. However, as recently as 2001-10, the average number of exploration well spuds per year was double the current rate – something industry must aspire to return to if it is to realise even the lower end of the estimated three-to-nine billion boe that are yet to be found.
Figure 26: Exploration Drilling
Exploration Wells Potential Upside on Forecast
Number of Exploration Wells (including geological sidetracks)
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Source: Oil & Gas UK, OGA
Recent announcements of exploration successes have come from both infrastructure-led exploration and wildcat drilling in less explored areas.
Drilling in the vicinity of existing infrastructure, such as the Beryl and Alwyn areas of the northern North Sea and the Capercaillie discovery in the central North Sea, has been encouraging. These discoveries have the potential to be developed quickly, while also helping to improve the ongoing economic viability of infrastructure and extending its productive life. There has also been encouraging results from wildcat wells in less explored areas such as the Halifax, Verbier and Achmelvich discoveries. Although a number of recent discoveries require further appraisal and the results of some other wells spudded in the last year are yet to be announced, a central estimate shows that around 350 million boe of proven and probable reserves were discovered in 2017. It is yet to be seen how many of these finds will go on to make commercial developments, although recent improvements to the competitiveness of the industry and the fiscal regime give them a stronger chance of proceeding.
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