Exploration is the lifeblood of the oil and gas industry. In order to maximise the economic recovery of the UKCS’ oil and gas resources, exploration and appraisal (E&A) activity must be revitalised in both mature and frontier plays.
E&A drilling activity in the UKCS has declined considerably from its peak in 1990. Although overall success rates have been steadily improving since then, the average discovery size within the mature basins of the UKCS has been decreasing. This is a natural consequence of basin maturity, but also reflects commercial factors including the tendency for operators to focus on lower-risk field development infill and near-field opportunities that generate short-term cash flow.
Despite this, the UKCS remains an attractive exploration destination, with lower finding costs and larger discovered volumes in recent years compared to many neighbouring basins. Full-cycle economic analyses demonstrate that opportunities in the UK present tremendous value compared to other global E&P investment destinations, a consequence of the attractiveness of the overall fiscal regime. The UK is also home to a well-established exploration skills base, including world-leading expertise in geoscience and engineering, which provides a solid platform for recovery.
Rejuvenation will require a significant increase in the levels of exploration activity whilst maintaining success rates and average discovery or cluster size through selective drilling within a balanced portfolio, targeting a spectrum of opportunities from near-field to frontier. This requires improved subsurface understanding and the application of modern, subsurface data acquisition, processing and analytical techniques, including seismic surveys using the latest technologies. Of equal importance are improvements in prospect economics through cost reduction, collaboration, and the timely sharing of knowledge, equipment and technology.
The Exploration Strategy has three priorities:
• Regional exploration
– Promoting exploration opportunities in the UK through both regional and targeted approaches including sharing knowledge, high-quality data and best practice
– Supporting continued drilling activity in mature areas
– Encouraging/incentivising exploitation of new and emerging plays
• Licence and work programme stewardship
– Regulating the optimal use of the UK’s acreage through licensing and licence stewardship
– Ensuring work programmes are delivered by licensees, and enforcing licence obligations
• Subsurface technical assurance and portfolio management
– Influencing the technical work carried out by licensees to improve exploration performance and to exploit prospective resources efficiently and fully through selective activity and shared drilling campaigns
– Ensuring technical and commercial alignment of partnerships within and across joint venture groups
The Exploration Strategy is also supported by a number of other strategies including the Asset Stewardship Strategy, Information Management Strategy and Technology Strategy. In addition, the powers granted under The Energy Act 2016 and the MER UK Strategy will ensure Industry and the OGA jointly deliver on their obligations.
Despite the low levels of exploration activity in recent years, significant discoveries have recently been made in the West of Shetland, and Northern, Central and Southern North Sea. Successful discoveries ultimately lead to the new field developments and the additional production needed to offset natural decline from existing fields. Revitalising exploration and exploiting the estimated 10-20 billion barrels remaining are key priorities for the OGA.
Read the Exploration Strategy here.
Recommended for you
