North Sea oil drilling should be ‘substantially’ increased, says Oil and Gas Authority
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The UK should “substantially” increase the amount of oil drilling in the North Sea following declining activity in the area since 2008, according to a new report.
The Wells Insight report from the Oil and Gas Authority (OGA) has also called for the oil and gas industry to work together to increase “cost-effective” drilling activity in the UK Continental Shelf (UKCS).
The OGA is an executive agency of the Department for Business, Energy and Industrial Strategy and was established in 2015 to form recommendations on the further management of the UK’s oil and gas reserves.
The report also proposes reductions in the cost of abandoning existing wells to “maximise reserves” and “sustain production”.
The OGA’s first Wells Insight report notes that more than 7,800 wells have been drilled in the UKCS to date, producing over 44 billion barrels of oil equivalent.
It found that well activity has been declining steadily since 2008 and development and infill well activity has halved since 2015 following the oil price drop. However, signs are emerging of an upturn in new well activity and the report said there is still significant potential in the remaining resources in the area.
In addition, more than 600 wells - 30 per cent of the existing active well stock - are “shut-in” at the moment, meaning oil or gas is not currently being extracted.
“The report’s key messages emphasise the requirement to substantially increase new well drilling, coupled with improved performance, to deliver the substantial UKCS reserves potential, improve well management to maximise production and a need to improve well-abandonment planning to reduce costs,” the OGA said.
The report added: “Well-abandonment activity has increased four-fold since 2016, with a similar forward trend predicted, with over 150 wells per annum being plugged and abandoned.”
Commenting on the findings Gunther Newcombe, OGA director of operations, said: “There are many examples in the report of industry delivering performance improvements and undertaking innovative approaches to well management, plus there is also an indication of an upturn in new well activity, all of which are positive indicators.
“However, there is also a need for a concerted effort by industry to substantially increase cost-effective drilling activity, improve the management of existing well stock and reduce well-abandonment costs to maximise reserves, sustain production and minimise decommissioning costs.
“This can be achieved by leveraging lessons learned, exploiting technology and working collaboratively with the supply chain to achieve transformational performance gains.”