Oil and Gas Regulator calls for (still) MER collaboration to maximise North Sea output. Or else…

Gunther Newcombe
Gunther Newcombe

The British Oil and Gas Authority ( B OGA) has today published  guidance on the use of Area Plans to further help improve industry collaboration and maximise economic recovery (MER) of oil and gas.

An Area Plan, comprises a number of principles set out in a stage gate framework and describes how economic recovery should be maximised in a particular geographical area of North Sea basin, based on the analysis of evidence.

These vary in magnitude, scale and complexity and in some cases can be integrated with other Area Plans to develop a regional strategy.

The new guidance has been developed to aid the industry’s understanding of their responsibilities for developing Area Plans and help improve collaboration across the North Sea.

Gunther Newcombe, OGA Operations Director, said: “We are working closely with operators, licence holders and other interested parties to develop Area Plans that integrate exploration, development, production, late-life planning and decommissioning.

“This should ensure the optimum use of infrastructure, extend the life of hubs and maximise economic recovery.”

But Newcombe warned; “If there is insufficient progress from industry during the work phase of developing an Area Plan, the OGA may intervene to take the lead from industry – i.e. complete the analysis and share findings with relevant Industry parties, and consider whether to produce a MER UK Plan based on the Area Plan.”

A ‘MER UK Plan’ sets out the OGA’s view of how any of the obligations of the MER UK Strategy may be met.

However, the B-OGA emphasised that it is the responsibility of Tier 1 operators (OGA cannot regulate Tier-2 supply chain providers) involved in producing and implementing an Area Plan to seek their own assurance that their conduct is compliant with competition law and that an appropriate competition impact assessment has been completed prior to among other things sharing information.

The B-OGA paper on Collaboration and Competition was first published in November 2016.

 

A sample OGA Area Plan for the Central North Sea is appended here for information: 

SAMPLE:  OGA Area Plan: Connection of area production hub to an oil pipeline system

  • Tie-in point made available by disconnection programme

Summary: Fast-track project execution programme required – multiple parties

  • Due to short notice of the pipeline disconnection, less than six month window to plan and execute tie-in works during planned 18-day maintenance shutdown – connection of new valve structure to enable subsequent pipeline tie-in
  • Operational programme required system-wide involvement of shippers/terminal – disconnection/connection works performed under ambient pipeline isolation conditions

Benefits:

  • Cross-party benefits captured through close collaborative working
  • The commercial behaviours demonstrated during the project show an embracing of MER UK and that overall value can be increased through collaboration. There was recognition that value for certain parties would be increased, whilst for others it remained unchanged.
  • Enabled full offshore work programme to be delivered within time constraints, while securing operational synergies and cost savings
  • The approach adopted during the CNS Area Plan is transferable across the industry – a regional approach to problem solving across the value chain

Securing a long-term oil export route for the production hub

  • Tie-in solution enabled a more complex and costly hot-tap connection to be avoided • Pipeline export solution facilitates enhanced production uptime performance and reduces fixed operating costs – maximises reserves recovery and long-term value

1 Aug 2017

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