The North West Europe region saw a bumper summer of exploration and appraisal drilling in 2017, with activity back up to a comparable level as prior to the oil price crash at the end of 2014 (see chart below). A combination of oil price recovery to above $50 per barrel and significantly cheaper rig rates — half of 2014 day rates — has prompted operating companies to drill, augmented by the favourable weather conditions during summer.
Figure 1. NW Europe exploration well spuds by quarter
UK takes lead with improving economic conditions
Drill-ready prospects that have been on hold for a couple years, and would likely have been drilled sooner in more favourable economic conditions, finally received approval and moved ahead quickly. A revitalised UK government body under the Oil and Gas Authority (previously under DECC) is arguably another factor. In the UK, a few companies had multiple prospects drilled: Statoil’s drilling campaign saw successful yet uncommercial oil at Mariner Segment 9, their Jock Scott prospect failed to encounter reservoir, and the Verbier updip sidetrack found oil at the second attempt, after an initial unsuccessful well; CNOOC Limited subsidiary Nexen operated two HPHT 150-days plus new field wildcats, with Craster still ongoing, whilst the earlier Glengorm well proved to be a non-starter; Summit Petroleum drilled the Ranger prospect and appraised Avalon; and BP’s Capercaillie prospect was drilled, while the Achmelvich wildcat still ongoing. Other spuds of note include UK onshore Cuadrilla’s shale gas exploration Preston New Road currently ongoing, after a difficult route through the planning procedure, and expected to be hydraulically fracked and flow tested at the end of the year.
Figure 2. Summer 2017 spuds
Norway had the usual spread of drilling in the North, Norwegian and the Barents Seas, which included Barents Sea Wisting and Alta appraisal wells, and Statoil’s multi-billion- barrel Korpfjell prospect 37km from the Norway/Russia border, that which proved to hold less than 0.5 Tcfg. Statoil also drilled Gemini N, Kayak, and Blåmann, proving successful discoveries in the Barents Sea but not resulting in standalone field developments. Ireland saw its first exploration well drilled since 2015, but the highly anticipated Druid/Drombeg well, targeting nearly 5 Bbo, ultimately disappointed operator Providence Resources and partners.
Perhaps the surprise package was notable success in the Netherlands where Oranje-Nassau Energie made a significant gas discovery at Ruby on the Dutch-German offshore border, and Vermillion drilled two onshore gas discoveries, Nieuwehorne-2 and Eesveen-2.
Whether this indicates the end of the decline for exploration and appraisal as a result of the downturn in North West Europe remains uncertain, however planned well numbers suggest a similar number of Q4 wells as the past few years, and that the summer of 2017 was a blip. Norway, UK and Denmark all have firm commitment wells due in the coming years and healthy award numbers in recent bid rounds for exploration acreage. Statoil has a second commitment well on the Korpfjell licence and reports five exploration wells planned for 2018 in the Barents Sea. The summer of 2017 suggests there is an appetite to drill under the right conditions and the summer of 2018 may see a similar quantity of wells being drilled.
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