Economic Report 2019

ECONOMIC REPORT 2019

Development Drilling Development drilling is crucial to unlocking contingent resources, as the relatively low level of drilling in recent years reflects the slowdown in new field approvals and general capital discipline across the industry. Seventy development wells were drilled in the first seven months of 2019, compared with 58 in the same period in 2018, a 20 per cent increase. Development drilling levels are being boosted by drilling operations across several projects which gained development approval in 2018, as well as infill drilling on brownfield assets. Sixteen production operators have drilled development wells so far this year, with some operators recommencing drilling operations on assets for the first time in many years. Repsol Sinopec, for example, is reactivating drilling packages on its Claymore and Piper Bravo platforms — a move that is expected to help recover up to an additional 9 million boe — and similar work is now taking place elsewhere in the basin. 34 Based on this trend and the visibility of upcoming work plans, it is anticipated that more than 100 development wells will be drilled on the UKCS this year, for the first time since 2015. This is encouraging and hopefully represents a return to a more sustainable rate of drilling across the basin.

Figure 21: Development Well Drilling on the UKCS

140

Development Wells Potential Upside on Forecast

120

100

80

60

40

Number of Wells Spudded

20

0

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Forecast

Source: OGA, OGUK

The recent focus across industry on competitive well delivery is also having a positive impact, with improvements madeacrossoperational performanceand in theuptakeofmoreconstructive supply chainmodels. For development drilling rates to continue to stabilise, industry must maintain its focus on effective well delivery, increasing value and continuing to adopt new and innovative commercial models with supply chain partners.

34 www.energyvoice.com/oilandgas/north-sea/197524/repsol-sinopec-plan-targets-additional-10million-north-sea-barrels

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