High oil prices pushed capital investment in the UK oil and gas industry to “record levels” last year despite a dip in drilling activity, a report from an industry stalwart claims.
Eoin O’Cinneide Upstream 10 January 2012 10:08 GMT
Such high investment is expected to continue “until at least 2014” although there will be a move away from exploration and appraisal (E&A) projects to development, according to industry consultancy Wood Mackenzie.
Some £7.5 billion ($11.6 billion today) in capital investment was pumped into the UK upstream oil and gas sector last year, a figure which represented “an all time high”, the research outfit’s latest report claimed.
“Wood Mackenzie expects investment to stay consistently high until at least 2014, as new fields are brought into development and incremental projects on existing fields are moved forward, including over £2 billion ($3 billion) expected investment in 2012 in the West of Shetlands area,” it wrote.
The company did, however, say that E&A drilling activity fell last year compared to previous years. It explained that this was due to many North American companies shifting their focus away from E&A work in favour of developing existing assets, as well as moving away from the UK to other parts of the world.
Wood Mackenzie’s lead analyst for the UK upstream sector Lindsay Wexelstein commented: “Companies have turned their attention away from E&A activity to developing fields for the time being as the stable, high oil price environment has offered them the opportunity to focus on progressing development projects to turn reserves into revenue.”
Although the consultancy expects E&A activity to pick up in 2012 on last year’s total of 47 spudded wells, the near-term focus will remain on development projects.
Wood Mackenzie also said that 2011 saw the most active deal market in the UK upstream sector since 2005, with $4 billion in assets traded.
“Our analysis shows that companies continued to consolidate interests in growth assets which will help push many of these developments forward.”
Date: January 10, 2012
Categories: Uncategorized
