UK offshore energy sector calls for 'urgent' action
Britain's offshore energy sector called Tuesday for "urgent action" by government and industry to boost North Sea exploration, which hit a 50-year low last year on slumping oil prices.
Just 14 exploration wells were drilled in 2014, which was the lowest number since the beginning of the industry in the 1960s, industry body Oil & Gas UK said in its annual survey.
Exploration and production companies operating on the UK Continental Shelf (UKCS) saw revenues shrink last year to just over £24 billion ($37 billion, 33 billion euros) -- the lowest level since 1998, it added.
"The current rate of exploration drilling is the lowest since 1965 and urgent action is required to stimulate activity in the area and generate future development opportunities," the organisation said.
It added: "This report ... conclusively shows that exploration activity on the UKCS has collapsed."
Activity was hit hard last year by rising costs, higher taxation and inadequate regulation, the organisation concluded in its report.
The sector needed to slash costs by 40 percent to combat slumping oil prices and prevent the further collapse of North Sea exploration.
"This year's activity survey paints a bleak picture but also identifies this region's potential, emphasising the importance of government and industry now putting the right measures in place to secure its long-term future," said Oil & Gas UK chief Malcolm Webb.
"This is crucial not only for the energy security that domestic oil and gas production provides but also for the hundreds of thousands of highly skilled jobs, advanced technology and billions of pounds of exports which the industry underpins.
"Without sustained investment in new and existing fields, critical infrastructure will disappear, taking with it important North Sea hubs, effectively sterilising areas of the basin and leaving oil and gas in the ground."
Global oil prices tumbled by around 60 percent between June and late January owing to an oversupply in world markets, a weak global economy and a strong dollar that made oil expensive to purchase for holders of rival currencies.
That has weighed heavily on exploration investment and sparked the cancellation of many projects that are deemed unprofitable.
"To maintain the sustainability and competitiveness of producing on the UK Continental Shelf in the current price environment, there needs to be a 40 percent reduction in unit operating costs to offset the fall in production seen since 2011," the group added.
Capital investment however rose to £14.8 billion last year, but this was due to project over-runs and ongoing development projects.
© 2015 AFP