Wells report reveals significant growth opportunities which must be grasped

A disappointing total of 48 development wells were drilled and 12 exploration and appraisal wells completed in 2022, according to the Wells Insight Report, published by the North Sea Transition Authority (NSTA) today (12 October).

This is against a NSTA baseline ambition of 60 development wells drilled per year to help slow the ongoing decline in production and assist in securing a greater proportion of domestically-produced hydrocarbons.

The drive for UK energy security was boosted with 334 mmboe of potential hydrocarbons discovered in the past three years, and it is important that appraisal and development of this possible resource is undertaken quickly in the drive to achieve secure domestic oil and gas production as the energy transition progresses.

Of the 48 wells completed, 40 are producers and eight water injectors. The total is down from the previous year in which 62 were completed, but the total development well spend of £1.23bn was only slightly less than the £1.33bn in 2021 indicating that average wellbore cost in the UKCS has risen.

The completed wells were mainly in the Central North Sea and Northern North Sea (CNS: 24 wells completed; NNS: 17 wells completed); with the Southern North Sea, three wells, and West of Shetland, four wells, making up the rest.

The UKCS is a mature basin and its existing well infrastructure, in particular the CNS and WoS areas, present opportunities to access new areas of individual reservoirs and increase recovery factors, via new wells and side-tracks from existing wellbores.

However, there is a continuing decline in well activity. There were 48 development wells spudded in 2022, down from 62 in 2021 and 73 in 2020. Similarly, well interventions dropped from 566 in 2020 to 522 in 2021 to 511 in 2022. E&A wells remained steady with 12 in 2022, up two from the previous year.

This decline in well activity could affect assets’ production, with fields approaching a cessation of production (CoP) tipping point. A situation is threatened in which operators delay investment which leads to declining production, in turn pushing CoP closer.

Total well stock has reduced steadily as fields reach the end of their lives and cease production, and this reduction is likely to continue with more fields reaching CoP by 2030.

There are nonetheless encouraging signs; the year has seen a reduction in shut-in wells from 785 to 743, a 5% reduction in shut-in well stock, as operators focused on intervention to restore production from idle wells reacting to increased commodity prices and the need to secure domestic supply.

Well intervention activity other than restoring shut-ins remained low with only 88 optimisation jobs completed and a decrease in safeguarding jobs from 235 to 208.

The Exploration and Appraisal (E&A) wells that were spudded in 2022 were mainly in the Central North Sea and Northern North Sea areas, with a total spend of £275m (£213m in the CNS and £62m in the NNS). This compares with £179m in 2021 for 10 E&A wells. For the third year running, there was no E&A activity in the WoS or SNS/IS in 2022.

The NSTA is concerned that operators only achieve around 60% of their projected drilling activity, and wants to see that figure substantially improve, as it gives supply chain greater confidence in the volume of work coming through.

Nonetheless currently operators suggest that activity may pick-up, they forecast, with high and moderate confidence, that 77 E&A wells which will be drilled between 2023-25.

• 12 of these 77 wells are forecast in 2023, 17 in 2024 with the remainder in 2025.
• 34 wells are in Central North Sea, 15 in the Southern North Sea/Irish Sea, 13 in the Northern North Sea/West of Shetland.

Andy Brooks, NSTA Director of New Ventures, said:

“We are committed to helping ensure UK energy security and well interventions which increase production from existing facilities can play a key role in that. Production from existing facilities can also have a lower carbon footprint.

“It is also vitally important that we increase development drilling in order to sustain domestic supply, and we are encouraged by the forecast pick-up on Exploration and Appraisal activity in the next few years.”