Oil Review Shows UK Economy Could Be Improved Over 20 Years
Submitted by: Regus
2013-11-13 00:01:22
A recent review of the offshore oil and gas industry has found that a new regulator could help advance the economy in the UK by £200 billion over the next two decades.
(OPENPRESS) Retired oil tycoon Sir Ian Wood has said the present regulator of the offshore oil and gas industry, which is part of the Department of Energy and Climate Change, is under resourced and is "too thinly spread" to properly manage an increasingly complicated operating environment.
This year, the UK government asked him to look at the industry and formulate several recommendations in his interim report on maximising the benefit of the country's remaining offshore resources.
Sir Ian maintained that the "full and rapid implementation" of his plan would provide the equivalent of at least three to four billion additional barrels of oil than what would otherwise be produced over the next 20 years.
The Labour Department warned that the division of the fiscal and regulatory regimes that would naturally follow a 'Yes' vote in 2014's referendum would significantly reduce the chances of achieving the objectives he set out.
However, Sir Ian has declined to be pulled into the political debate, stating his scheme would be implemented regardless of what happened. "This is a report about the UK continental shelf and it focuses on trying to get the best out of the region," he commented.
He also suggested that a new regulator should be financed by the oil industry as he believes it would help create strategies in areas like exploration and production efficiency.
Sir Ian, who is also the former chairman of multinational oil and gas company Wood Group, interviewed 40 active firms in the industry, representing over 95 percent of UK Continental Shelf production, for the said report.
During his research, he found that an increasingly diverse group of operators is currently investing in the industry, but exploration and production rates are decreasing, and activity is beginning to fragment into a variety of smaller fields.
He said, "I believe it is not time for a step change in the North Sea stewardship in collaboration. We need to be prepared for the challenges of this next phase in the UKCS's life." "A better resourced arm's length regulator with a strong economic focus, capable of attracting top quality personnel with appropriate industry experience, will be able to work more closely with the industry and facilitate the development and progress we need," he added. "This will require fundamental changes in operator behaviour but, as my interviews confirmed, they are clearly up for it."
The equivalent of approximately 41 billion barrels of oil have been produced from the industry, with estimates of additional production ranging from 12 to 24 billion barrels.
Energy Secretary Ed Davey said the report had provided the government and industry alike plenty to think about, and that he would start plans to maximise the UK's oil and gas resources in the New Year.
The report was also welcomed by Oil and Gas UK, which asked the government to "move swiftly ahead" with the recommendations.
Scotland's Energy Secretary Fergus Wing said the Scottish government is fully behind Sir Ian's report. He stated, "We share Sir Ian's view that the industry should finance this body and since most of the developments in the North Sea and west of Shetland are managed from Aberdeen, Europe's oil and gas capital, we believe the only conceivable principal location for the new regulatory body is in Aberdeen."
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