More oil and gas developments are expected to go ahead in British waters this year than over the last three years, according to new research.
Between 12 and 16 developments are scheduled, amounting to £5 billion of investment as the industry recovers from the oil price slump in 2014.
These greenfield and major brownfield developments could yield more than 450 million barrels of oil and gas and emerge from a period cost control and innovation which has made firms leaner and more efficient.
However, the Business Outlook report from Oil & Gas UK warns that current output of 600m barrels a year still falls short of the level required to sustain long-term production.
Exploration in the North Sea oil and gas sector is at its lowest level since the early 1970s with only 94 wells drilled last year. This is the first time the number has fallen below 100 since 1973.
Oil & Gas UK chief executive Deidre Michie said: “Our sector is leaner, more efficient and more optimistic than it has been in recent years and 2018 looks set to be a better year.
“What we have learned in our response to the downturn has made us better equipped to tackle the ongoing challenge of maximising production for the longer term and boosting profitability in the supply chain but without increasing overall project costs or damaging competitiveness..
“More projects are taking place and investment is happening because of the sweeping changes made to adapt to the challenging business climate.
“This has helped make the UKCS one of the most attractive mature basins in the world in which to do business and we will continue to work hard to maintain our competitive advantage.”
The industry is more positive about employment and the report notes that more than 300,000 people still work in and support the sector across the UK.
More than half of companies surveyed expect to take more workers this year.
The report comes just a day after French oil giant total announced up to 250 job cuts following last year’s acquisition of Maersk’s North Sea operations.
Graham Hollis, senior partner for Deloitte in Aberdeen, below. For context, Deloitte is sponsor of Oil & Gas UK’s Aberdeen Breakfast Briefings in 2018.
He said: “Oil & Gas UK’s new Business Outlook is well timed following some uptick in the confidence of the UK’s oil and gas industry in recent months.
“Reflecting this confidence, some of the Outlook’s key findings are encouraging, not least the increase in production forecast for 2018, and level of investment expected in the UKCS. These clearly tie back to the efficiencies and improvements that have been put in place during the last few years.
“However, some fundamental challenges remain, particularly the need for new, successful, exploration and maximising the potential of existing fields. It is in these areas that all parts of the industry need to embrace transformative change – collaboration, innovation and new technology will all be critical to assuring the long term future of the UKCS.”