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There Might Be More Oil Under The North Sea Than Previously Thought

There Might Be More Oil Under The North Sea Than Previously Thought

Energy experts RBN Energy highlighted an interesting trend this week. Showing that oil production from the U.S. offshore is actually growing — even as onshore shale oil production has begun to fall with lower prices. Here’s the chart:

Source: RBN Energy

And some new insider data this week shows that offshore may indeed be a rising trend across the oil and gas business.

That comes from consultants Hannon Westwood. Who reported some interesting figures for the past year from one of the world’s go-to oil and gas locales: Europe’s North Sea. Related: Crashing Oil Prices And Dropping Rig Count Take Their Toll On U.S. Output

On the negative side, Hannon Westwood notes that drilling in the U.K. North Sea hit an all-time low in 2015. With just 13 exploration wells spudded in the offshore here during the year.

But what happened in reserves additions was completely unexpected.

Despite the low level of drilling activity, the wells that did get completed in the U.K. offshore were incredibly productive. With commercial success rates for these drills being the highest for over a decade.

That success led oil and gas production from the U.K. North Sea to its first yearly rise in 15 years — with output rising over 7 percent during 2015.

These impressive numbers are underscored by a comparison to the U.K.’s neighbor in the North Sea: Norway. Where a higher number of wells were completed last year, but reserves additions were exactly the same as in the U.K. Related: Statoil CEO: Expect Volatility Now, Price Spike Soon

Hannon Westwood’s analysis shows that U.K. drillers added 16.5 million barrels of oil equivalent per well, while Norway wells averaged just 6 million boe.

That’s an interesting stat — given that drillers have recently been favoring Norway over the U.K. Perhaps leading to an under-explored nature here, which gives enhanced potential for larger discoveries.

This suggests there may be more potential than many observers are expecting in this part of the world. Watch for M&A in the North Sea aimed at taking advantage of this trend, and for results from exploration wells drilled here during the coming year.

Here’s to less being more

By Dave Forest

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