THE North Sea still offers significant opportunities for oil and gas firms although exploration drilling in the area plunged to record lows last year, the regulator has said.
The Oil and Gas Authority noted that only nine exploration and appraisal wells were drilled in the UK North Sea in 2020 compared with 29 in the preceding year.
The OGA said the fallout from the pandemic had weighed on activity.
However, it noted that firms which have invested in exploration in recent years have found plenty of oil and gas collectively.
“Success rates have improved, and Operators have discovered over half a billion barrels of oil equivalent (boe) in the past three years,” said the OGA.
In a report on wells, the OGA also noted that only 73 were drilled last year on fields under development, down from a high of 106 in 2019. At the end of 2020, only 51 development wells were planned for 2021.
However, the organisation added: “There is a forecast rebound in drilling activity with Central North Sea and Northern North Sea [off Scotland] leading the way in the years following 2021.”
The OGA also noted the potential to increase production from the 2,600 active wells in the UK North Sea.
READ MORE: North Sea oil firm Orcadian backed by City of London investors
Separately, North Sea-focused Orcadian Energy said it had received a “Letter of no objection” from the OGA in respect of the development concept it submitted in respect of the Pilot oil field east of Aberdeen.
The letter will increase directors’ confidence that Orcadian will be able to get the required OGA approval for a detailed development plan for Pilot. It will have to submit an environmental impact assessment to the OGA as part of this process.
The company’s chief executive Steve Brown said: “We believe the plan that we have developed, once executed, will ensure that the Pilot Field emissions will lie in the lowest five per cent of global oil production.”
Craig Howie at joint house broker Shore Capital noted that Orcadian expects to use windpower from facilities close to Pilot to reduce emissions. He said the environmental credentials of the plan under development should appeal “not just to investors looking for reduced carbon footprints, but also the OGA which is clearly now placing a significant emphasis on environmental impact in its permitting decisions”.
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