New Exploration Wells Down, Development Up In U.K. North Sea

Exploration and appraisal (E&A) drilling will decline sharply this year in the U.K. North Sea, reports U.K.-based energy-research and -consulting firm Wood Mackenzie. The firm predicts 63 E&A wells will be drilled in 2006, down sharply from 87 last year. The reasons are a shortage of available rigs, and a wealth of development opportunities. Companies have good prospects in inventory, and the number of available rigs has surged in the U.K. offshore 15% above last year’s level, but development wells are taking center stage this year. Operators are pushing development drilling to accelerate production and take advantage of current high oil prices, says WoodMac analyst Alison Sheppard. Although the numbers of E&A wells are lower, discovery results have been strong so far this year. During the first half of 2006, five operators made seven discoveries. The exploration success rate was 39%, compared with 24% achieved in 2005. Average discovery size was 15 million barrels of oil equivalent. For more on this, see the September issue of Oil and Gas Investor. For a subscription, call 713-260-6441.