LONDON, Jan. 12 (UPI) -- Low oil prices are a growing cause for concern in the exploration and production sector of the North Sea, analysis published Monday by Wood Mackenzie finds.
The analytical group said the region brought in $19 billion in capital spending last year, making the British North Sea sector one of the top 10 for upstream spending. With oil prices falling more than 50 percent since June, data show exploration and production activity was slowing down.
Erin Moffat, a senior research analyst at Wood Mackenzie, said exploration activity in 2014 was off 18 percent from the previous year. Only four fields were brought online.
"The current oil price means 2015 will unsurprisingly bring further budget cuts, with exploration spending at the top of the list," she said in a statement.
Major international oil and gas companies are cutting their capital spending plans as oil prices continue to fall. Ithaca Energy, which focuses on North Sea production, said Monday its budget for capital spending this year would be down about 60 percent from last year. Production is expected to decline by about 4 percent.
Oil production from the North Sea has been in decline since the late 1990s. Government data show a decline of 7 percent from 2013, though the rate is slowing.
The government in February said it was moving forward with recommendations from retired businessman Ian Wood, who led a panel tasked with finding ways to breathe new life into North Sea reserve basins.
Wood's panel found there may be an additional 4 billion barrels of oil equivalent available for recovery in the North Sea.
British tax policies for North Sea have drawn criticism from its Scottish counterparts. Scottish Energy Minister Fergus Ewing said in a Sunday statement the economics were stacked against companies looking to start new work in the North Sea.
"Exploration rates in the North Sea are at historically low levels," he said. "If action is not taken, this will reduce the number of new discoveries, and in turn future production."
