Output up but outlook unclear for UK offshore sector

Oil production from the UK sector is set to peak next year, but the new millennium does not appear to hold out a glowing prospect for exploration or production. Andrew McBarnet reports on a Wood Mackenzie prediction and other pointers to future UK offshore operations. There was a note of urgency about the announcements at this year's Offshore Europe event in Aberdeen made by the new UK ministerial team of Stephen Byers, Secretary of State for Trade and Industry, and Helen Liddell, Minister with responsibility for energy matters including North Sea oil and gas. They made it clear that they were putting their weight behind a raft of proposals from the Oil and Gas Industry Task Force aimed at maintaining the UK oil industry as a major force. But, reading between the lines of a recent report by oil analyst Wood Mackenzie and other clues, any measures will struggle to combat a host of factors conspiring to turn UK offshore into something of a backwater in the years to come. There are already some ominous indicators out there. For example, exploration and appraisal (E & A) activity has long been a benchmark for judging the health and prosperity of the North Sea upstream sector. In 1990 there were some 200 E & A wells completed. Since that peak year the numbers have declined each year dropping to 58 in 1998 and expected to fall even further to between 30 and 40 wells in 1999. This will be the lowest level of activity witnessed in 30†years, and how long has it been since there were only two drilling rigs drilling E & A wells off the UK in the month of August as happened this year?