Business Outlook 2018

The low level of drilling activity also gives rise to concern over the broader impact this will have on the drilling, wells and reservoir services sector. The relative lack of drilling activity could ultimately lead to a loss of capability in the supply chain as businesses specialising in well services focus on other geographies or leave the sector altogether. Current drilling rig utilisation rates are at around 50 per cent, with the potential for rigs to be permanently taken out of service or moved to service contracts in other basins, from which they are unlikely to return due to high relocation costs. This could leave the UK drilling market susceptible to price increases should the demand for drilling recover. The Competitive Well Delivery Initiative, led by Oil & Gas UK’s Wells Forum, is striving to achieve a sustainable, lower cost of drilling, which will help to accelerate the development of discoveries and stimulate a rise in exploration activity.

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