The UK oil and gas industry is at the halfway stage of development, with "at least as much oil and gas to produce as has already been produced," said James May, director general of UK Offshore Operators Association Ltd. (UKOOA), at the annual Institute of Petroleum meeting last month in London.
However, he acknowledged that UK offshore drilling hit an all-time low in 2002, with just 19 wells drilled on the UK Continental Shelf (UKCS). He also noted that the UK industry has been spending more—in excess of £6 billion since 2000—to produce less. Unit operating expenditures are expected to rise 20% to $4.90/boe by 2010, he said.
However, May said, "The North Sea still offers a range of opportunities for the independent and new entrants, such as Apache (Corp., Houston,) and Perenco (UK Ltd.)—increasingly so, as materiality of assets is becoming a key issue for the oil majors (OGJ Online, Jan. 20, 2003, and Feb. 14, 2003)."
However, for the North Sea to remain competitive among the world's suppliers of oil and natural gas, May said, "A new culture (is) required, focusing on new commercial attitudes and using new technology to better interpret the geology and reserves."
He said it also requires support of the UK government and initiatives focused on restoring capital and operating and commercial efficiency.
Bank of Scotland's Gerald Kenny, noted that while drilling and production activity has fallen in recent years, the North Sea industry has a relatively successful discovery rate of 10 million boe/well drilled.
Kenny expects the buying, selling, and trading of North Sea properties will remain active in coming years, with majors transferring their less-profitable holdings to independents.
