The classic definition of insanity from Prof. Albert Einstein is to keep on doing the same thing over and over again while expecting a different outcome from the same repeated action.
Unless the UK oil and gas industry stops doing the same old thing over and over again that it has always done, it will self-evidently fall into Einstein’s definition.
The UK Government (belatedly) understands this – albeit with the help of Aberdeen pensioner (and industry champion) John Wood, whose prescription for the restoration of the offshore North Sea oil and gas industry to rude economic health involves a large injection of ‘collaboration’.
Nobody can order the price of crude oil to stop falling. So the only thing the industry can do is to take action on the things it can control. So it has to reduce its costs – without compromising on safety.
So it has to look at new ways of working. New ways of doing things. And new ways of co-operating, sharing best practice, bench-marking within and between industry sectors.
And to start collaborating with each other.
One of the tragic, but all too common mistakes, that oil and gas explorers make is to confuse ‘competition’ with ‘collaboration’.
Major international oil companies compete with each other (at least as far as the North Sea is concerned) only with regard to bidding for state-regulated ‘franchises’ (aka ‘licences’) to explore strictly (and legally) defined ‘geographic territories’ (or land).
It is, in essence, no different to buying / selling residential property by which the UK state guarantees the owner’s property (via registration on the Land Registry) thus enabling the property owner to see off rivals from his land.
But the same-said house owner – having registered his title with the UK state (in the Land Registry) thereafter has a common interest in co-operating, or ‘collaborating’, with his (or her) neighbours to find the most cost-effective plumbers, joiners, roofers, carpeters, painters, decorators and removal firms to install and maintain his property – ie to ‘maximise economic value’ from the property.
North Sea ‘land owners’ (ie Tier-1 national and multi-national oil and gas exploration companies) cease competing with each other once they have ‘bought the farm’ – ie registered their land/ title with the UK state/ DECC.
Thereafter, they have a common interest in collaborating to identify and share best practice between themselves so to both maximise their own profits and/or shareholder returns by Maximising Economic Recovery (MER) – aka asset value.
The diagnosis of the industry in the Wood Review was so bad, that the UK Govt stepped in to ensure the UK oil and gas industry Maximises Economic Recovery (MER) by making collaboration (best-practice sharing, bench-marking, etc) compulsory in its forthcoming Energy Act. This legislation in the present Energy Bill progressing through the UK parliament, will give – for the first time – the OGA power to compel operators to collaborate.
So if you want to get ahead of the curve, learn from your collaborators best practice and bench-mark good practice, book your place at the innovative UK Oil and Gas Collaboration Conference 2016.
The inaugural UK Oil and Gas Collaboration Conference 2016 is being held at the historic King’s College Centre at the University of Aberdeen on 14 April 2016. It is being organised by Scottish Energy News in collaboration with the University’s Institute of Energy.
For information on bookings, sponsorships and/or speaking opportunities, please contact:
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