Posted on 20.05.2006 - 08:38 EDT in OFFSHORE NEWS by ginamc
The number of wells drilled on new projects in the North Sea reached a six-year high in 2005, with some significant finds providing evidence of the potential of the province, according to sector specialists.
Researchers at Hannon Westwood, which has amassed a vast database covering North Sea oil and gas fields, logged 57 new exploration and appraisal wells in 2005, representing a second successive year of sharply increased activity.
The number of wells drilled on new projects compares with 48 in 2004 and 34 in the preceding year.
With oil and gas firms making or progressing discoveries containing more than 700 million barrels oil equivalent, Jim Hannon, co-founder of the consultancy, said the activity levels confirmed there was plenty of life left in the North Sea. Initial reports indicated some sizable discoveries had been made.
"Contrary to popular belief, the report shows the North Sea had a tremendous year for reserves found and appraised, " he said.
Hannon Westwood reckoned that finding costs averaged dollars-1 to dollars-3.60 per barrel, "in the right range" to compete internationally for funds.
The United Kingdom Offshore Operators' Association, which represents oil and gas firms, said increased drilling reflected a recovery in confidence after activity fell sharply in the wake of chancellor Gordon Brown's decision to levy a tax premium on North Sea profits in 2002.
It warned that the chancellor's decision to double the premium to 20% from April could lead to a flight from the province. Given the long lead times in the industry, drilling levels may be sustained this year.
However, Hannon did not expect the tax increase to have much impact, given booming oil and gas prices and the fact many firms engaged in exploration activity had no producing assets. These will not be generating taxable production income.