Business Outlook 2019

Progressing reserves to replace production through development drilling will help ensure production levels are managed effectively going forward. There is significant cross-industry action ongoing to help ensure a sustainable level of drilling activity is achieved. OGUK’sWells Forumfacilitates the sharing of good practice and the development of guidelines and tools to improve performance in this area. This is resulting in improvements in well delivery, however many of the work areas will require time to embed and impact on industry performance. Drilling Rig Market As outlined in section 5, there has been significant pressure on the supply chain in recent years. Drilling contractors have been amongst the most affected, due to the relative reductions in drilling activity. Throughout the downturn there has been spare capacity within the North Sea, meaning several drilling rigs have been stacked, scrapped or moved out of the UKCS. A loss of capacity and resources within the drilling sector is a real threat to the ability of industry to meet any increase in drilling activity in a sustainable manner. The availability of a well-resourced supply chain will be crucial to maximising economic recovery from the basin. Looking forward, it is anticipated that the rig market will tighten this year, especially for higher specification rigs. However, there is clear seasonality within work programmes, with E&P companies preferring to complete work scopes in the summer months due to more favourable weather conditions. A tightening of the market is therefore expected during the summer, with further overcapacity during the winter months.

1

2

3

4

5

Figure 13: Mobile Drilling Rig Market Outlook

6

45

Jack-Up Rigs

40

35

7

30

25

8

20

15

Number of Rigs

9

10

5

10

0

11

Denmark

Netherlands

UK

Norway

Marketed Supply

Source: IHS Markit

29