Deloitte: Drilling up offshore the UK, down off Norway

Offshore drilling for oil and natural gas is rebounding in the UK and declining in Norway, according to a quarterly report by Deloitte.

Across all of Northwest Europe, drilling is down slightly. In this year’s third quarter, operators spudded 33 exploration and appraisal wells, down 5 from the comparable period of 2011. But the third-quarter total for the region is up 8 from the first quarter and up 4 for the second quarter.

Of the regional third-quarter 2011 total of wells spudded, 26 are offshore the UK and Norway.

The UK increase

In this year’s third quarter, operators spudded 17 exploratory and appraisal wells on the UK Continental Shelf (UKCS), 1 more than in the same period of 2011. The quarterly total is down 1 from the second quarter this year and up 6 from the first quarter.

The 46 wells spudded in the first three quarters on the UKCS this year compares with 36 wells in the same period of 2011. It remains down from comparable-period totals in 2009 and 2010.

Deloitte notes that the UK government raised taxation of offshore producers in 2011 but has since improved the fiscal regime.

“Recent positive announcements in the UK government March Budget 2012 with regards to the extension and changes in field tax allowances should stimulate further exploration, appraisal, and development activity,” the firm said. “Furthermore, the announcements made to provide more certainty on the decommissioning tax relief, if implemented, should allow companies to recover cash previously tied up in financial guarantees for further investment across the UKCS.”

Of the wells spudded on the UKCS in this year’s third-quarter total, 9 are in the Central North Sea, 4 in the Moray Firth basin, and 4 in the West of Shetland area. Nine are exploratory wells, the rest appraisal.

Six UKCS fields received development approval during the third quarter this year, up 2 from the first quarter and up 1 from the second quarter. Three of the most recent quarter’s approvals are in the Southern North Sea basin, 2 in the Central North Sea, and 1 in the Northern North Sea.

Norwegian drilling

Offshore Norway, operators spudded 9 wells in the third quarter this year, compared with 16 in the same quarter of 2011.

In the first three quarters, 27 exploration wells were spudded in Norwegian waters this year, compared with 41 in the comparable period of 2011. Operators spudded 10 wells in the first quarter this year and 8 wells in the second quarter.

Of the third-quarter 2012 drilling total, 8 wells are in the Norwegian North Sea and 1 in the Barents Sea. No well was spudded in the Norwegian Sea in the third quarter.

Deloitte attributed the Norwegian drilling decline to delays in drilling start-ups, longer-than-expected drilling times, geologic complexity, an increased focus on well-testing and seismic work in less-explored areas, and a tight drilling market.

No Norwegian fields received development approval in the third quarter. Two fields received approval in each of the first and second quarters.

All other drilling offshore Northwest Europe in this year’s third quarter was in Dutch waters. All 7 wells spudded offshore the Netherlands in the quarter are exploratory.

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