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UKCS Outlook Exploration Outlook Exploration and appraisal expenditure in 2003 was £400 million. The latest indications from the recent 2004 Department of Trade and Industry exploration survey project that exploration and appraisal expenditure will rise by 12.5% in 2004 compared with 2003. Exploration expenditure could rise to £490 million by 2006, 23 % above 2003. It remains to be seen whether this will develop into a sustainable rise in exploration activity in the UKCS. Any renewed confidence in the UKCS must be nurtured by all stakeholders to build a sustainable future. New Developments There were 13 new fields brought into production in 2003. Additionally 11 new projects were given development approval in 2003, including 4 brownfield projects (new production from existing fields). The new developments (with expected on stream date) consist of Broom (2004) and Buzzard (2006) - both oil; Seymour (2003) - condensate; Carrack (2003), Nugget N4 (2003), Rose (2004) and Rhum (2005) - gas; Incremental projects encompassed Schiehallion Phase 4 and Pierce (oil); Jade NE Flank (condensate), Clipper (gas). Figure 6 provides a summary of the developments planned to come on stream in 2004 and 2005 based on data from Wood Mackenzie. Figure 6: Projected UKCS Field Developments 2004 / 2005 Source: Wood Mackenzie Decommissioning Projections of future decommissioning activities remain highly uncertain. In part this is a mark of the industry's continued success in extending the economic life of much of the UKCS infrastructure. This has been achieved both by the drive to reduce operating costs and the success in attracting new incremental developments. Figure 7 shows the projected timing of decommissioning covering some 400 facilities within the UKCS. Figure 7: UKCS Decommissioning Profile Along with technical, environmental and safety issues, the optimum timing of decommissioning is affected by economic factors and will be based on projections of all future costs and revenues - including decommissioning costs, their tax treatment and potential upside from new business. Optimum economic decisions on decommissioning will rely on a stable fiscal environment which provides certainty for all stakeholders and regulatory pressures being contained. It is likely that estimates of decommissioning costs will remain highly uncertain until the industry has removed a number of the key deep water installations in the northern North Sea. The latest forecasts show some slight delay in decommissioning timings compared with 2002; however costs to 2030 are projected to rise by £600 million to circa £ 9.1 billion (2003 money).