The UK’s oil and gas sector is facing a major challenge over the coming years, with levels of exploration dropping – only 15 new wells were drilled last year, according to industry body Oil and Gas UK.
That was despite strong levels of investment, reaching a record in 2013 and sustained so far in 2014. Production costs are up by 15 per cent, while exploration drilling was down by 44 wells when compared to six year ago.
British utility company Centrica recently announced plans to focus on markets in Norway and North America rather than the UK, citing rising costs as a major factor in its decision, reports BBC News.
The average cost of extracting a barrel of oil was up by 27 per cent over the last 12 months, reaching £17, according to the survey. Furthermore, the number of fields with a cost per barrel above £30 has doubled in the last 12 months.
Levels of investment remained high in known reserves, however, and are expected to reach £13 billion over the course of the year.
Malcolm Webb, chief executive of Oil and Gas UK, said the amount of cash being pumped into the sector is positive but warned that soaring costs could yet have a major impact.
“Even if currently planned wells proceed, the rate of drilling is still too low to recover even a fraction of the estimated six to nine billion barrels yet to be found,” explained Mr Webb.
“Britain’s waters contain an abundance of oil and gas yet to be found and it is critical we find the means to turn the current state of exploration around. Rig availability and access to capital are the two main barriers noted by our members.”
With these concerns on the horizon, firms will need to take advantage of what they already have, which is where customer relationship management (CRM) systems can come into their own.
CRM processes can help firms take advantage of their data to better engage with the market and make informed decisions, which could be crucial as prices continue to rise.
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