WoodMac: UK exploration, appraisal drilling to decline in 2006

July 28, 2006
Exploration and appraisal drilling in the UK will decline by 28% from an 8-year high of 87 wells in 2005 to 63 wells in 2006, according to Wood Mackenzie Ltd. in a report, UKCS—2006 Exploration Review & Outlook.

By OGJ editors
HOUSTON, July 28 -- Exploration and appraisal drilling in the UK will decline by 28% from an 8-year high of 87 wells in 2005 to 63 wells in 2006, according to Wood Mackenzie Ltd. in a report, UKCS—2006 Exploration Review & Outlook.

"Operators have indicated that there are numerous opportunities waiting to be drilled, however the lack of available rigs is limiting E&A activity," said Alison Sheppard, analyst, Europe Upstream Research, for WoodMac.

"Although the number of rigs active in the UK has gone up by around 15% this year, a focus on development drilling to accelerate production and take advantage of the high oil prices has caused a shift away from exploration and appraisal of new fields," Sheppard said.

Despite the forecast of drilling reduction, seven discoveries were made in this year's first half. The exploration drilling success rate of 39% compares favorably to the 24% achieved in 2005. However, with an average discovery size of 15 MMboe, combined reserves equates to less than 2 months of current UKCS production.

Focus areas
Exploration's main focus in 2006 has been near-field in the traditional areas of the Central and Northern North Sea and Southern Gas basin, with discoveries announced this year being less than 20 km from existing infrastructure.

"However, there has also been a slight shift in focus away from these core areas, with a number of higher-risk wells being drilled in more frontier environments," Sheppard said.

WoodMac said the West of Shetland sector has featured more prominently with several appraisal wells drilled around Clair and Foinaven-Schiehallion. Sheppard said, "Continued appraisal of West of Shetland discoveries such as Lochnagar and Alligin through the second half. . .could have a big impact on future activity in this area if successful."