Deloitte report: Surge in British offshore drilling activity

Oil rig Deloitte said eight new fields had come onstream on the UKCS so far this year

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A surge in offshore drilling activity under British waters points to renewed confidence in the sector, according to a new report.

Accountants Deloitte said activity rose year-on-year by 64% in the second quarter of 2012.

The report also found eight new fields had come onstream across the North Sea so far this year.

The figure was higher than the total number of field start-ups recorded last year.

It was also more than double those seen in 2009 and 2010.

Deloitte, which documents drilling and licensing across north west Europe, found 18 exploration and appraisal wells were drilled on the UK Continental Shelf (UKCS) during the second quarter.

The number of deals involving the sale of oil and gas fields also rose year-on-year by 46% in the last quarter.

'Positive' outlook

Deloitte said the outlook for the UK oil and gas industry was "positive".

Graham Sadler, managing director of Deloitte's Petroleum Services Group, said: "We traditionally experience a rise in activity during the summer months, however this year's spur of activity reflects a higher year-on-year increase.

Start Quote

It is reasonable to assume that we will see an expansion on the exploration campaigns started during the last quarter”

End Quote Graham Sadler Deloitte

"We have some way to go before we are back to the levels seen in 2009 and 2010.

"However the positive announcements in the government's March Budget with regards to the extension and change in field tax allowances should encourage further exploration, appraisal and development activity".

He added: "Furthermore, the announcements made to provide more certainty on the decommissioning tax relief, if implemented, should allow companies to recover cash flow previously tied up in financial guarantees for further investment across the UKCS."

Mr Sadler said recent tax changes introduced by the UK government seemed to be encouraging organisations to look at the North Sea in a more positive light.

"While we will have to wait until next year to see the full impact, the highly competitive 27th Licensing Round is likely to trigger more exploration and appraisal commitment from companies who are putting down plans for the next two to three years," he said.

"With an improved fiscal environment and steadily high commodity prices, it is reasonable to assume that we will see an expansion on the exploration campaigns started during the last quarter."

Deloitte said the average Brent oil price for the second quarter was $108.3 per barrel, compared to $118.43 per barrel in the first three months of the year.

The oil price continued to be strong, hovering at around $100 per barrel mark, but has for the first time in over a year dropped below this figure.

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