Business Outlook 2020 - Autumn Snapshot

BUSINESS OUTLOOK 2020: Autumn Snapshot

Drilling Activity

450

Exploration

Appraisal

Development

400

350

300

Following on from an increase in activity in 2019, at the beginning of the year OGUK anticipated a similar level of activity for 2020. However, the operational impact of COVID-19 and low commodity prices have resulted in significantly reduced drilling rates. Fifty-four wells were spudded in the first ten months of 2020, meaning the year is now almost certain to see the lowest total levels of drilling activity since the early 1970s and the lowest exploration and appraisal activity in the basin’s history. Only six exploration wells have been spudded so far and it is possible that there will be no further exploration drilling this year. Five of these were drilled by Apache in the area around the Beryl field infrastructure in the northern North Sea, the other being Total’s Finzean prospect in the central North Sea. One appraisal well and 47 development wells have been drilled, though there is the potential for a small number of further appraisal wells and a limited number of development wells to be drilled in November and December. Despite the low levels of activity seen this year, there are still a significant number of opportunities being matured within company plans. OGUK continues to progress initiatives and support the work of the MER Task Forces to help companies across the basin unlock these opportunities. This includes work to improve partnerships to create multi-operator and multi-well campaigns which will help unlock efficiencies across the supply chain. It must be recognised that drilling and rig contractors face significant pressures and are in a fragile position, with many entering into Chapter 11 bankruptcy and taking decisions to scrap and sell units. Decisions that companies are being forced to take now will have a lasting impact on the capabilities across the industry.

250

200

150

Total Number of Wells Drilled

100

50

0

1964 1969 1974 1979 1984 1989 1994 1999 2004 2009 2014 2019

Source:OGA

160

Exploration

Appraisal

Development

140

120

100

80

60

TotalNumber ofWellsDrilled

40

20

0

2017

2018

2019

2020 Jan-Oct

Source:OGA,OGUK

8