UKOOA survey reveals signs of recovery Organisations and Associations
// June 5, 2000
The first signs that confidence appears to be returning to the offshore oil and gas industry have been revealed in a survey by the UK Offshore Operators Association (UKOOA), the representative organisation for companies operating on the UK Continental Shelf (UKCS).Twenty-two companies, accounting for around 95 per cent of all the oil and gas produced offshore in 1999, were recently on what they expected to spend on exploration and development over the next three years. They were also asked to predict, on that basis, what future activity was likely to be for the same period.The responses suggest that expenditure on both exploration and development in 2000 is set to rise above 1999 levels. Development spending is expected to reach £3.5 billion this year (compared with an estimated £3.2 billion in 1999 and £5.1 billion in 1998), while exploration budgets are also up slightly, from £0.3 billion in 1999 to a predicted £0.4 billion in 2000.The survey also indicates that the number of exploration and appraisal (E&A) wells drilled this year is anticipated to rise to 48, compared with 31 in 1999. However, UKOOA notes that activity was slow during the first three months of this year, with onlysix E&A rigs on location, and despite predictions of 54 wells in 2001, the figures still lag behind 1998 levels when 59 wells were drilled.New developments over the next three years could lead to orders for 25 'jackets' or offshore production platforms, about half of which would be destined for the southern sector of the North Sea. Greater demand is expected for sub-sea equipment with some68 sub-sea tieback clusters projected over the same period. One new floating production development (FPSO) is anticipated for 2000, but none thereafter.The results compare favourably with a survey carried out by the Department of Trade and Industry (DTI) in February, which painted a bleaker outlook for the offshore oil and gas industry."The DTI survey was constrained by budgets set when the oil price was still hovering at $15-16/barrel, and the figures now seem to be conservative", commented James May, UKOOA Director-General."Consistently higher crude oil prices mean that operators are re-assessing their budgets and appear to be more optimistic, a mood which is reflected in this latest survey"."However, the figures also reveal the impact of increasing maturity in the North Sea, demonstrated by the greater call on sub-sea technology as the Industry seeks to maximise cost-efficiency by tying back the development of new satellite fields to existing infrastructure."
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