High oil prices and the introduction of North Sea tax breaks led to bumper investment in UK waters last year, fuelling hopes of a strong 2013 for the industry.
An annual review published today by Deloitte’s petroleum services group shows 65 exploration and appraisal wells were drilled on the UK Continental Shelf (UKCS) in 2012, a 33 per cent hike on the previous year’s total of 49.
The UK government also granted 21 field development approvals, the highest for ten years. A further eight “incremental projects” – investment in older fields for redevelopment – were given the green light.
The report said an increasing number of purchasers buying fields outright was also a sign of confidence.
Graham Sadler, managing director of the Deloitte group, said a number of factors were driving strong growth in the UKCS region with indications of positive prospects for the sector continuing into 2013.
“After several years of caution and uncertainty, we have a more positive environment, where a number of factors such as tax incentives, high oil price and appetite to invest have combined to make 2012 the most encouraging year for a long time.”
He said the introduction of a number of tax reliefs meant companies and investors had the confidence to “take some risk and expand their operations”.
Last year the Chancellor announced an increase in the allowances for small field development and introduced a new tax break for large deep-water developments targeting West of Shetland.
Derek Henderson, energy partner for Deloitte in Aberdeen, said: “North Sea oil and gas production may have passed its previous zenith, but in the recently announced tax reliefs the UK government has what appears to be a useful strategy to manage the decline in North Sea’s reserves.”
The growth in UK activity compared to lower drilling levels reported in Norway in 2012, down by 19 per cent.