There are signs for greater optimism on the UK continental shelf, according to Offshore staff quoting from consultant Wood Mackenzie. The British sector may experience a modest recovery in 2017 after the setback of last year, helped by a slowly improving oil price.
The UK has always been a high-cost offshore region, but the recent downturn forced companies to focus on reducing operating costs.
Operating costs were slashed to £16.50/boe ($20.34/boe), down more than 40% from the peak just two years ago. This helped a number of companies to survive.
Exploration and appraisal drilling hit a 50-year low in 2016, but despite this volumes discovered were the highest since 2008.
This year the consultant forecasts 15 exploration wells on the UK shelf, and these should also benefit from the current low-cost environment.
These conditions will lead many companies to drilling operations, and to urge some of the biggest companies to return to explore in the UK.
Fourteen new fields are expected on-stream this year adding to the strong near-term production outlook
New UK developments are currently limited, but by 2020, about 30% of production will come from fields that aren’t on stream yet.
Capital investment has declined 20% in 2016 to £8.4 billion ($10.35 billion). The decline is due to investment projects reaching completion, a scarcity of new investments and cost reductions.
However, as investment increases across the oil and gas industry in general, this in turn will benefit the North Sea. Three new UK projects are likely to go forward in 2017 and a further three could get the go-ahead if conditions improve further.