The UK’s prolonged winter subdued drilling activity and deals in the North Sea, after a robust finish to 2012, a report from American consulting firm Deloitte said.
Compiled by Deloitte’s Petroleum Services Group (PSG), the report found that both drilling and deals on the UK Continental Shelf (UKCS) flattened during the first quarter of 2013 due to unfavourable weather conditions.
According to the report, only nine new wells were drilled during the period, compared to 11 drilling during the same quarter in 2012 and 19 in the last quarter of last year.
The report said that during the first quarter of 2013, a total of 23 exploration and appraisal wells were drilled in north-west Europe, compared to 25 wells in the same period of 2012.
Farm-in agreements accounted for 36% of deals completed following the 27th Licensing Round, while the overall deal activity in first quarter dropped to 19 against 23 closed in the first quarter of 2012.
The report also revealed that the Department of Energy and Climate Change (DECC) approved two fields for development activity during the first quarter of 2013, while only three fields came on-stream.
During the same period in 2012, the DECC had approved four fields for development, while no fields were brought on-stream. Only four, out of the five fields, that received approval or came on-stream this quarter, qualify for the small field allowance, while one qualifies for the ultra-heavy oilfield allowance.
Deloitte Aberdeen senior partner Derek Henderson said drilling and deals will rise throughout the rest of 2013, as confidence in the North Sea was still high, mainly due to government tax incentives.
"Generally activity eases during the first quarter each year and, based on the second half of last year, we would certainly expect later spring and summer to demonstrate a return to the kind of momentum we saw then," Henderson added.
"The oil price is still favourable and there are an increased number of incentives to encourage investment in North Sea exploration and development."
Deloitte PSG managing director Graham Sadler said the shift in pace during the last quarter was not a sign of waning appetite from UKCS participants.
"Deal volume may be down, but it is still relatively strong and the increasing proportion of farm-ins would suggest the need for smaller companies to seek funding partnerships for future drilling," Sadler added.
"Drilling rigs are also at a premium currently, with 96% rig utilisation for the first quarter of 2013, so there is a lot of activity."
Image: Prolonged winter in the UK delayed drilling activity and deals in the North Sea. Photo courtesy of freedigitalphotos / suwatpo.
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