Economic Report 2018

ECONOMIC REPORT 2018

Exploration on the UKCS – Beginning to Turn a Corner? Between 2000-08 the discoveries of fields like Buzzard and Culzean meant that good progress was made in adding to the reserves base. However, exploration has endured a difficult period over the last decade; poorer success rates, a high cost of drilling and a production focus driven by high oil prices meant that the UK has struggled to attract exploration investment. There have been some encouraging developments in the last two years, such as Lancaster and Halifax, with an improved exploration success rate and an increase in volumes discovered, despite the relatively low number of wells drilled. Improvements to the competitiveness of the basin and licensing structure mean that the foundations are in place for industry to increase exploration rates.

Figure 32: Historic Exploration and Appraisal Activity, Including Oil Price and Major Discoveries

90

120

Brent Oil Price (RHS) Exploration Wells (LHS) Appraisal Wells (LHS)

Culzean

80

Halifax, Lincoln, Verbier

100

70

Rosebank

60

80

Buzzard

50

60

40

30

40

Brent Oil Price ($/bbl)

20

20

10

Number of Exploration and Appraisal Wells per Year

0

0

2000 2002 2004 2006 2008 2010 2012 2014 2016 2018

Source: OGA, EIA

1,000

51

Annual Discovered Volumes (LHS)

Cumulative Volumes Discovered (RHS)

900

50

800

700

49

600

500

48

400

47

300

200

46

Discovered Volumes per Year (Million boe)

100

Cumulative Discovered Volumes (Billion boe)

0

45

2000 2002 2004 2006 2008 2010 2012 2014 2016

Source: OGA, Oil & Gas UK

58