Often during the ups and downs of the energy industry’s cycles, people dismiss the front-running offshore playsâ€"Gulf of Mexico and the North Seaâ€"as viable exploration and production arenas. But just when these offshore areas are thought to be passe, new discoveries prove them otherwise. On the U.K. Continental Shelf (UKCS), June oil and gas production was down 18% from the year before, according to The Royal Bank of Scotland. But activity is increasing. Last year, total investment in the UKCS for exploration, new-field development and operations rose 15% to 9.7 billion pounds from the prior year, according to the U.K. Offshore Operators Association (UKOOA). The number of wells drilled rose 30% to about 300. These were mostly development wells. But operators spudded 61 exploration and appraisal wells of that total, up from 49 in 2004. In the 24th UKCS licensing round, held in June, 121 companies applied for 255 blocks; awards are to be announced this fall. Twenty-four new E&P players participated in the round; some 28 newcomers bid last year. Several are start-ups that are newly public on London’s Alternative Investment Market (AIM). “We’re in a very attractive window right now. We’ve had a poor reputation for the past 10 years, but it’s changed,†says Jim Hannon, managing director of Hannon Westwood in Glasgow. The consulting firm, with an office in Houston, tracks UKCS merger and acquisition, licensing, farm-in and drilling activity as well as providing strategic business and geological advice. For more on this, see the October issue of Oil and Gas Investor. For a subscription, call 713-260-6441.
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