Drilling activity in British waters fell by 25% in the past quarter, according to figures released today.
Firms operating on the UK continental shelf (UKCS) only drilled five exploration and four appraisal wells in the three months, compared with 12 in the final quarter of 2010.
The figures, revealed in business adviser Deloitte’s north-west Europe review, show UKCS drilling activity for the first three months of 2011 was also down 25% year-on-year.
Analysts at Deloitte’s petroleum service group said that, while the drop could not be attributed to Chancellor George Osborne’s £10billion tax raid on the industry, it could set the pattern for activity in the future.
In Norwegian waters, new drilling activity was nearly 25% higher between January and March 2011 compared with the fourth quarter of 2010.
Graham Sadler, managing director of Deloitte’s petroleum services group, said: “It is important to clarify that we are talking about a relatively small number of wells that were drilled during the first quarter of the year – the traditionally quieter winter months – so this is not, in itself, an unexpected decrease. The lead-in time on drilling planning cycles can be long, even up to several years, so any impact from the recent changes to fiscal terms are unlikely to be seen until much later in the year.”
Mr Sadler said there had been signs UKCS operators had been optimistic about the future of the region before Mr Osborne’s Budget announcement.
He added: “What is clear is that, despite the decrease in drilling activity towards the end of last year and during the first months of 2011, the outlook for exploration and appraisal activity in the North Sea appeared positive.
“The oil price continued to rise and there were indications that this, combined with earlier UK Government tax incentives, was encouraging companies to return to their pre-recession strategies. Since the Budget, a number of companies have announced that they intend to put appraisal and development projects on hold and we will have to wait to see the full effect of this change on North Sea activity levels over the coming months.”
The figures revealed the central North Sea saw the most new activity in the first quarter of 2011. Of the nine new exploration and appraisal wells from the past quarter, five were drilled in the central region compared with two in the southern North Sea and one each in the north and on the Faroe-Shetland escarpment.