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North Sea players keep “appetite”

for HI drilling: Westwood

NORTH SEA NORTH Sea players still have the “appetite” expected to abate, certainly over the next 12-18
for high-impact (HI) exploration over the next months,” Moseley said. “Of the 46 exploration
This is despite a low 12-18 months, Westwood Global Energy Group wells that we see being drilled in the North Sea
success rate for high has said in a new report, despite low success rates before the end of next year, 12 of those are tar-
impact drilling in the and difficult market conditions. geting high impact prospects. So clearly there is
region. The research, published on June 30, shows still risk appetite.”
that between 2015 and 2019 some 124 explo- One of the key “drivers” behind HI explora-
ration wells were drilled in the UK and Norwe- tion is the need to replenish declining reserves
gian North Sea. The wells led to 29 discoveries “and the only way to replace big reserves is by
holding a combined 1.06bn barrels oil equivalent targeting big prospects,” Moseley said.
(boe) of commercial resources, replacing 15% of CNOOC is the region’s most successful
the reserves produced over the period. explorer over the past five years, based on Glen-
Some $5.2bn was spent on exploration gorm, net costs, its commercial success rate and
drilling during these years, but the success rate the amount of hydrocarbons it has discovered,
of these wells was only 23%. In 2015, when 32 according to Westwood. In second and third
exploration wells were sunk, the success rate was place are Aker BP and Idemitsu.
a mere 6%. For HI wells, the success rate over the It is more advantageous to drill wells near
five years was 12%. existing rigs and pipelines in order to reduce
During the period, only one HI prospect of 25 risks, Westwood said, and this will remain the
targeted led to a major discovery. This was Aker main strategy of operators.
BP’s Liatarnet find off Norway last year, esti- Unsurprisingly, there has been a lull in
mated to contain up to 200mn boe. CNOOC’s exploration this year, especially in waters off
250mn-barrel Glengorm find that year in UK the UK. Owing to Norway’s tax regime, which
waters – the largest gas field to be discovered in allows operators to deduct up to 80% of explo-
over a decade – was not considered a HI target ration costs, activity off Norway has fared better.
when it was drilled. Despite the decline, the success rate among the
But despite disappointments, operators are eight wells drilled on both countries’ shelves so
far from deterred. In fact, almost a third of wells far this year has been 50%, Westwood said. These
scheduled to be drilled by the end of next year include HI discoveries such as Isabella off the UK
are targeting HI prospects, Westwood analyst and Iving/Evra off Norway.
Dave Moseley said during a webinar presenting “So fairly positive performance really for the
the findings. year,” Moseley said. “In terms of current activity,
“We saw an increase in high impact drill- it’s actually very representative of what has come
ing over the last five years. That appetite is not in the last five years.” ™

P14 www. NEWSBASE .com Week 27 09•July•2020