Economic Report 1999 Index

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Exploration Activity The rapid decline in drilling activity since January 1997 can be clearly seen in Figure 10. Figure 10 - Exploration and Appraisal Drilling Activity Please click on the image below to view the full chart: Whilst oil and gas prices have played a major role in determining this trend, the decline has been exacerbated by the high cost of drilling, recent disappointing drilling results in West of Shetland, the maturity of the North Sea and the legacy of the Government's earlier intention to increase offshore taxation. The combination of these factors has reduced expectations of increased exploration activity. Development Activity After several years of high activity, a similar decline in development activity has been experienced over the past two years, although because of long term construction commitments it has not been as pronounced as for exploration. Nevertheless, development spending in 1999 at £3.2 billion is some 25% down on recent years. Much of the decline is related to weak oil and gas prices, but the maturing nature of the UKCS, with fewer large capital intensive projects, is undoubtedly a factor in the underlying trend.