Tight Northwest Europe rig market crimps E&A

Demand for drilling rigs is expected to continue to outstrip supply in Northwest Europe this year, holding back exploration and appraisal drilling. This is the prediction of Wood Mackenzie Consultants Ltd., Edinburgh, which expects Northwest Europe's offshore operators to spud 163 E&A wells this year, compared with 166 drilled in 1997. "Underlying North Sea area E&A demand," said the analyst, "has been restrained in recent years by the predominance of development drilling and the extreme

March 2, 1998

4 min read

Demand for drilling rigs is expected to continue to outstrip supply in Northwest Europe this year, holding back exploration and appraisal drilling.

This is the prediction of Wood Mackenzie Consultants Ltd., Edinburgh, which expects Northwest Europe's offshore operators to spud 163 E&A wells this year, compared with 166 drilled in 1997.

"Underlying North Sea area E&A demand," said the analyst, "has been restrained in recent years by the predominance of development drilling and the extreme tightness of rig markets, and this is set to continue into 1998.

"Despite the possible impact of a continued low oil price environment on E&A activity, the underlying level of demand could absorb a certain amount of rationalization without impacting our forecast."

Norway

Wood Mackenzie says Norway is likely to see 40 E&A wells drilled in 1998 compared with 39 in 1997, although operators have plans for 46 wells.

"The continued high level of exploration success offshore Norway," said Wood Mackenzie, "which averaged 96 million boe/exploration well in 1997, the backlog of prospects identified through 3D seismic, and the surge in developments employing subsea technology have led to the continual increase in drilling activity in the Norwegian sector over the last 5 years."

The analyst says Norway's operators have adopted long-term contracts as a way of securing more rig time for 1998 compared with 1997, although this will be taken up by development drilling.

"In 1998," said Wood Mackenzie, "development drilling is expected to increase by around 7% from the level seen in 1997.

"The majority of this drilling will take place in several large field developments, which will mostly be brought on stream over the next year: Åsgard, Troll Oil, Ekofisk II, and Gullfaks Satellites."

U.K.

Britain's operators have earmarked a total of 124 E&A wells for 1998, although Wood Mackenzie reckons the tight rig market and development drilling will hold the total back to 90.

This compares with a total of 89 E&A wells drilled off the U.K. in 1997: eight along the Atlantic Margin, 36 in the central North Sea, 21 in the northern North Sea, 21 in the southern gas basin, and three elsewhere.

In 1998, Wood Mackenzie expects demand for rigs for development drilling to rise by 4% from 1997 to a record 27.5 rig-years.

"Activity will continue on fields that have recently come on stream," said Wood Mackenzie, "such as Foinaven, Captain, and Erskine. Boulton, Mallard, Schiehallion/Loyal, and ETAP (Eastern Trough Area Project) fields will also see further development activity.

"Fields that received development approval in 1997 and are either already utilizing mobile rigs for development work or have development time contracted for 1998 include Banff, Elgin/ Franklin, Shearwater, Galley, Janice, Pierce, Ross, Renee/Rubie, Malory, Viking satellites, and Waveney."

Netherlands

Netherlands offshore operators are expected to drill 26 E&A wells this year compared with 28 in 1997, again constrained by rig demand and development.

Wood Mackenzie said Dutch development drilling is expected to remain at the same level as in 1997: Elf Petroland BV is expected to bring five fields on stream in 1998, Nederlandse Aardolie Maatschappij BV (NAM) is expected to develop four, and Occidental Netherlands Inc. three.

"Of the larger fields currently being developed, NAM's L/9-FC and Elf's K/4-A are likely to require three and five wells, respectively."

Other areas

Denmark is expected to see four E&A wells drilled this year compared with six in 1997, as operators focus on development programs.

Eighteen development and re-entry wells were drilled by Danish operators in 1997, mainly in Dan and Harald fields, and development well numbers are expected to rise by 30% this year.

Ireland's E&A total is expected to amount to three wells this year. One has already been completed in the Irish Sea, while Enterprise Oil plc, London, is expected to drill one wildcat and an appraisal of Corrib discovery along the Atlantic margin this year.