FT - Crisis Hits North Sea Production Outlook - # Of Exploratory Wells Down 78% YOY From Q1 2008

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The remaining lifespan of the UK’s North Sea oil and gas production risks being halved as the economic crisis has prompted a plunge in exploration in one of the western world’s most important deposits, the industry has warned.

The number of exploration wells being drilled in the North Sea has collapsed by 78 per cent in the first quarter of 2009 compared with the same period last year, according to the most recent industry data from Deloitte, the accounting and consulting firm.

In total, only 18 exploration and appraisal wells were drilled in the UK during the first quarter, marking a 41 per cent drop in total drilling activity compared with the same period last year. UK Oil and Gas, the industry group, is even more pessimistic, forecasting that total drilling could drop 66 per cent this year.

Derek Henderson, senior partner at Deloitte, said: “Unless exploration is at a healthy clip, it risks shortening the life of fields and the overall UK continental shelf, in this case.” Exploration and appraisal wells are critical to any oil region’s long-term supply prospects. But they are particularly important for the North Sea, where ageing fields’ production is rapidly declining.

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http://www.ft.com/cms/s/0/40ed13fa-2794-11de-9b77-00144feabdc0.html?nclick_check=1