In the recently published Annual Report and Accounts 2019/20, the Oil and Gas Authority (OGA) reiterates the “Revitalised Exploration” target of the discovery of 200 mmboe recoverable per year. Looking at the level of activity as seen today, it looks increasingly challenging to meet this target.
The year started positive, with a reported success in the Apache-operated Solar well (9/18e-42), spudded in December 2019. In addition, in March Neptune announced the discovery of gas and light oil in the Isabella prospect in the Central North Sea.
However, at the moment only one exploration well (9/18a-43) is being drilling on the UKCS; the Gair prospect in the Beryl Embayment, also operated by Apache. Given that the well was side-tracked on 4th July this may indicate a positive outcome, but the simple statistic that the Gair well is the only exploration well spudded in 2020, the outlook for the rest of the year and the associated target of 200 mmboe looks optimistic.
Last year was positive
As presented in the Annual Report and Accounts 2019/20, 2019 was a good year for exploration in the UKCS, with 243 mmboe discovered. This must be mainly due to CNOOC’s Glengorm find in the Central North Sea, which is reported to have an estimated recoverable resource of around 250 mmboe. Another successful well that was announced last year was Ossian-Darrach (42/04-1Z) in the Southern North Sea. This well, drilled by ONE Dyas, is reported to have found oil and gas in the Permian Zechstein and/or Carboniferous, but given the volumes reported by the OGA for 2019 and the estimated resource for Glengorm, it seems as if no volumes have yet been assigned.
In 2019, a total of 17 exploration wells were spudded on the UKCS, which was a positive comeback from a low in 2018 when only seven exploration wells were drilled. With this in mind, 2020 is looking to be a new record if exploration drilling does not resume quickly.
Before the Covid-19 crisis kicked in, expectations were that 2020 would see a similar number of wells drilled as the year before, as reported by Westwood Global Energy in January 2020. Nobody would foresee that the events unfolding in recent months would lead to the current situation whereby only one exploration well spud took place. With the oil price creeping up slowly and the global restrictions on movement being gradually lifted, there may be a renewed appetite for exploration drilling in the months to come.