North Sea oil, gas drilling halves - Deloitte

LONDON (Reuters) - Oil and gas drilling operations in the UK Continental Shelf have more than halved in the last year, industry figures from business advisory group Deloitte showed on Thursday.

Deloitte's North West Europe Review, which summarises drilling and licensing in the region, said only 15 exploration and appraisal wells were started in the UK between the beginning of April and the end of June, down 57 percent year-on-year and a 17 percent fall from the first quarter of this year.

Of the new wells, most were in the Moray Firth and West of Shetland, where fewer than 10 percent of UK wells are situated. A further 20 percent were in the central North Sea, 20 percent in the East Irish Sea, with the Southern North Sea falling to 6 percent.

"Activity continues to reflect difficult economic conditions, a need to control costs and increasingly restricted exploration budgets," Graham Sadler, director of Deloitte's Petroleum Services Group said in a statement.

"Interestingly, the Norwegian sector is experiencing growth in exploration and appraisal drilling with a 50 percent rise from the second quarter of 2008, aided by the activity of StatoilHydro (STL.OL) and government tax incentives.

"Longer lead times on drilling West of Shetland (have) helped sustain levels in this region in comparison to areas such as the Southern North Sea."

Deloitte's figures are in line with data issued on Wednesday by industry grouping Oil & Gas UK, which said British oil and gas production could fall sharply over the next decade unless new investment is encouraged.

In a worst-case scenario, UK oil and gas output could fall to around 0.5 million barrels of oil equivalent per day (boepd) by 2020, but if sufficient investment were brought into the industry it could be as high as 2 million boepd, it said.

UK oil and gas output peaked in 1999 at 4.5 million boepd.

Despite more than four decades of production, industry groups estimate that Britain is still sitting on as much as 25 billion barrels of oil equivalent and has 40 percent of its reserves yet to be recovered.

(Reporting by Christopher Johnson; editing by James Jukwey)