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Volume 30 Issue 24 out now!
NEW REGULATOR, MORE DRILLING NEEDED TO REVIVE UKCS
| vol. 30 - no. 23 27 February 2014|
| |From Aberdeen (IF): The final report into maximising oil and gas recovery from UK waters, by a group led by Sir Ian Wood, calls for renewed cooperation between industry, a new regulatory agency and the UK government.
It has been estimated that the British economy could receive a £200bn boost through the recovery of an additional 3-4bnboe of North Sea oil and gas.
Sir Ian’s final review, which follows last November’s interim report (SEN, 30/17), provides more details of the ambitious new strategy, which has already been given the backing of the UK government.
The former chairman of oil service company Wood Group said, ‘I see this as a watershed opportunity to...reshape the regulatory environment, extend the life of the UK Continental Shelf (UKCS) and bring at least £200bn additional value to the economy over the next 20 years.
‘We need to step up our game to maximise the recovery of our hydrocarbon reserves and attract more investment.’
The final report offers recommendations, including the creation of a new arm’s length regulatory body and a commitment to a new strategy to maximise economic recovery from the UKCS.
Actions suggested include urgently assessing the potential to stimulate exploration and establishing why high demand for acreage in recent licensing rounds has not converted into more seismic and drilling activity.
There is also a case for specific measures to promote exploration around critical infrastructure, while the regulator and industry should develop regional plans for each area and play across the UKCS.
Malcolm Webb, CEO of industry body Oil & Gas UK, said: ‘The UKCS still has significant...potential, with up to...24bnboe to be...produced offshore...However, realising this...will not be without its challenges.
‘Underlying the current record investment and high activity is a more complex picture. The number of fields in operations has climbed from 90 to over 300 since the 1990s, new discoveries are typically small, production is falling, costs are climbing, and exploration is at an all-time low.’
Webb said to maximise the recovery of the country’s resource will require a much greater degree of collaboration on the part of both industry and the government.
‘We...strongly welcome the proposal for a new...regulator with additional powers and resources. We see this as the necessary catalyst for change, ensuring that the stewardship of the country’s...resource is taken to a new level.
‘The new tripartite approach is key and crucially important. All three parties have a role to play, with the industry, the new regulator and HM Treasury sharing a common vision of the steps that must be taken to deliver the maximum economic benefit for the industry and the country in this critical next phase of the UKCS’s life.’
Energy Secretary Ed Davey said the government would press ahead with gusto on Sir Ian’s recommendations. When asked about his confidence of achieving the 24bnboe extra target, Sir Ian told SEN this would be down to a range of factors such as new technology and the price of oil.
Prime Minister David Cameron said, ‘For many years, the UK has supported the North Sea...industry and we have worked together to make this an economic success the whole country can be proud of....I promise we will continue to use the UK’s broad shoulders to invest in this vital industry so we can attract businesses, create jobs, develop new skills in our young people and ensure we can compete in the global race.’