Deloitte: Offshore Drilling Falls 9pc in 2010

Lucas Gilmore, “Big 4″ observer
January 14, 2011 /

Compared with the 77 offshore drilling recorded in 2009, Deloitte’s latest North West Europe Review showed a 9 percent decrease in drilling activities on the UK Continental Shelf (UKCS) in 2010, or a total of only 71 offshore drilling. This level can be compared with the offshore drilling activities recorded prior to “record oil prices” starting 2008, Deloitte said.

“Although the oil price has steadily increased during the second half of 2010, this time last year the economy was still very fragile and it’s likely that economic uncertainty may have played a part in a more cautious approach to drilling schedules for 2010,” energy partner with Deloitte in Aberdeen Graham Hollis said.

Despite the drop in offshore drilling activities, Hollis still pointed to the consistency of the record with the previous levels seen in the last 10 years, saying the decrease has been a “fairly minimal” one. He also said Deloitte has been expecting the level considering that the UKCS is a “more mature region.”

In 2010, the number of international acquisitions dropped more than 60 percent against the drop in 2009, including the takeover of Dana Petroleum by Korea National Oil Corporate (KNOC), Deloitte said. But the drop has been compensated by the rise in the number of farm-ins, from 16 in 2009 to 58 in 2010, Deloitte added.

The number of farm-ins recorded in 2010 was the highest in the last decade while price of oil was recovering at $81/bbl compared with $61/bbl in 2009, Deloitte noted.

Managing director of Deloitte’s Petroleum Services Group Graham Sadler said most of those that engaged in farm-in activities were independent oil and gas players that sought to fund their programs at a relatively minimal financial exposure, which in return presented to the licensed companies “less risky and less costly” way to expand their portfolios.

“This makes sense given the difficult credit conditions that have prevailed until more recently,” Sadler added.

 

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