North Sea oil and gas wells leap fuelled by tax breaks

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The Independent Online

Drilling for North Sea oil and gas took off last year, as a resurgence in the UK continental shelf pushed up the number of new exploration and appraisal wells by a third.

A total of 65 wells were drilled in 2012, up from 49 the year before, as government tax breaks in last year's budget fuelled the revival in the UK section of the North Sea, according to Deloitte.

Graham Sadler, managing director of Deloitte's petroleum services group, said: "After several years of caution and uncertainty, we have a more positive environment, where tax incentives, the high oil price and appetite to invest have combined to make 2012 the most encouraging year for a long time."

The number of North Sea deals also jumped, rising by 30 per cent to 80 last year, according to Deloitte. These were split evenly between outright purchases of oil and gas fields and so-called farm-ins, where a company injects cash into an existing field to help fund its development.

This week, the headhunter Oil and Gas People forecast that up to 50,000 jobs would be created in Britain's oil and gas industry this year, on the back of the record £40bn of investment due to be ploughed into the shelf over the next three years.

In October the Department of Energy and Climate Change awarded a record 167 new licences on 330 North Sea blocks. Although North Sea production will probably never return to its peak output in 1999, when it produced 4.5 million barrels a day, the expansion should help lift it from last year's level of about 2 million.