Business Outlook 2017

Development Drilling Historically, there has been a strong correlation between the rate of development drilling and production rates, with the rate of drilling generally being a good indicator of future production output. In 2016, development drilling fell by almost one third to 88 wells after having plateaued at around 120-130 wells per year for the last seven years. The indications are that this downturn will be sustained for the immediate future at least, with no signs of any increase in the rate of development drilling over the next two years. The impact of this on the production outlook is a cause of concern. While the wave of new field developments in recent years will support production in the immediate future, there is a risk of a rapid fall in production post-2020. Action taken now can help to avoid a potential decline in production. The pipeline of opportunities must be continually replenished. While the business environment has begun to improve and well costs are lower than they were three years ago, it will take time to see an improvement in drilling activity. In the short term, there is a need for commercially attractive in-fill targets to be identified and matured to boost activity. Over the longer term, the drop in development drilling activity further emphasises the need to improve the rate of exploration and ensure that discoveries can rapidly gain investment sanction. Industry working together will help make the UKCS among the most competitive mature basins for attracting new investment.

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Figure 17: Development Drilling

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Number of Development Wells (including geological sidetracks)

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2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: OGA

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