Energy research firm Wood Mackenzie’s latest report has revealed the impact of the depressed economic conditions on activity in the UK’s upstream oil and gas sector during 2009.
The Edinburgh-based firm said exploration and appraisal drilling plummeted by 37% as the global financial crisis and the resultant lack of funds led to an overall reduction in activity.
Furthermore, uncertainty over oil prices caused delays to projects and wells.
Geoff Gillies, WoodMac’s lead UK and southern Europe upstream research analyst, said: “The key metrics we looked at show that, as expected, the economic climate has had an adverse effect on activity in the UK upstream sector, however, the upside is that we expect exploration and development levels to stabilise in 2010, and then pick up from 2011 onwards.”
WoodMac said that at just 140million barrels of oil equivalent, the volume of new reserves brought on stream was the lowest in the history of the UK continental shelf, and a nine-year low of just eight new fields started production.
Development approvals were also down, with only six fields granted approval compared with 12 in 2008.
Mr Gillies said: “Wherever possible, companies shelved discretionary spending on new projects, choosing instead to honour existing contracts and focus on maintaining and increasing prod-uction from existing fields.”
“Development activity levels may take slightly longer to recover, but we do forecast increased capital investment in 2011. A key indicator of confidence in the UK upstream sector and the ability of the smaller players to become involved once again will be the 26th licensing round, expected in the first half of 2010.”