For the last few decades, the North Sea has been the preferred area for the exploration and production of oil and gas. However, in the last couple of years, with plunging oil prices, a number of oil and gas drilling rigs in the region have been decommissioned or have cut down production. Today, the number of rigs operating in the North Sea is the lowest ever.
Baker Hughes, a services company that monitors oil and gas drilling activities globally, stated that just 27 rigs were operational in September in the North Sea. This is the lowest number since the firm started collecting data on oil and gas rigs in 1982. Previously, the lowest number of operational oil rigs in the North Sea was in October 1999, when the price of oil slipped down to $10 per barrel.
Oil and gas activities were at its peak in the 1970s and the early half of the 1980s. This was the period when large oilfields such as Oseberg, Brent, Ekofisk and Forties were found. However, oil and gas exploration in the North Sea has always been expensive, and that is why oil and gas contractors and companies have been affected by the slumping oil prices.
In 2014, OPEC decided not to curtail oil production and to give member countries a free hand to produce oil as they see fit. Earlier, the price of oil was dependent on supply and demand, but with nations pumping oil at will, the market was flooded with oil, bringing down the prices.
It may come as a surprise that even though the number of operational rigs has reduced substantially, the North Sea has witnessed an increased in production due to the projects that were approved when oil was being sold at $100 a barrel. The International Energy Agency said that production in July increased to a four-year high.
However, this does not herald a resurgence of North Sea oil and gas. Oil and gas contractors and companies are cutting costs to strengthen their bottom line. Oil & Gas UK said that in Britain, 120,000 oil industry jobs will be cut by the end of 2016.