The UK’s offshore oil and gas exploration, production and investment activities in 2014 forecasts capital expenditure of around £13bn, representing the second-highest year for investment on record, according to an annual report from trade association Oil & Gas UK.
Based on Oil & Gas UK’s Activity Survey 2014, the spending is likely to remain above £10bn in 2015, following a record £14.4bn in 2013.
New developments, along with an increased focus on production efficiency, saw an average of 1.43 million barrels of oil equivalent per day produced in 2013, which is said to be 8% lower than 2012.
In 2014, production is expected to pick up further and 25 new fields are expected to come on-stream over the next two years.
Following this development, by 2018, production is projected to increase gradually to around 1.7 million barrels of oil equivalent per day.
According to figures from the Department of Energy & Climate Change (DECC), only 15 exploration wells were drilled in 2013, continuing a steep downward trend since 2008 when 44 exploration wells were drilled.
Oil & Gas UK chief executive Malcolm Webb said: "Even if currently planned wells proceed, the rate of drilling is still too low to recover even a fraction of the estimated six to nine billion barrels yet to be found.
"Britain’s waters contain an abundance of oil and gas yet to be found and it is critical we find the means to turn the current state of exploration around."
Further, the report suggests a positive effect of tax allowances in driving investment on the UKCS.
The report noted that 26 brownfield projects were initiated in 2013, out of which 23 benefit from the Brown Field Allowance.
Total investment of £39bn is currently approved on the UKCS, with another £35bn awaiting sanction, which is expected to deliver nearly three billion barrels of oil equivalent.
Operating expenditure in the offshore sector increased by 15.5% to £8.9bn in 2013, and is anticipated to rise further to around £9.6bn in 2014.
Webb added: "The UK’s offshore oil and gas industry is the country’s largest industrial investor, paying more tax into the Exchequer than any other sector.
In order to sustain this sector’s sizeable economic contribution to Britain, it is vital that a competitive environment for investment is sustained."
Based on the latest data supplied by all exploration and production companies operating in the UK, the Activity Survey 2014 provides an insight into the opportunities and potential of the industry.
Image: Offshore oil rig platform. Photo: courtesy of num_skyman / FreeDigitalPhotos.net.