Oil & Gas UK – the trade association for most of the sector’s exploration and supply chain companies – has welcomed the Wood report setting out his recommendations and strategies for maximising the economic recovery of the country’s remaining oil and gas resource.
Commissioned by the Department of Energy (DECC) last year to conduct an independently led review of oil and gas activity on the UK Continental Shelf (UKCS) and its regulation, Sir Ian Wood’s core recommendation is a new strategy, Maximising Economic Recovery for the UK (MER UK), which proposes more rigorous stewardship of the UK’s remaining oil and gas resource through the creation of a new independent government regulator with additional powers and resources, strong tripartite co-operation between the regulator, HM Treasury and the industry, and greater collaboration between the oil and gas production companies.
Malcolm Webb, Chief Executive, Oil & Gas UK, said: ““This is a seminal moment in the history of the UK continental shelf. The report is a game changer.
“We have the opportunity to secure a bright future for our industry and unlock at least a further £200 billion for the UK economy. Collaboration is key to safely maximising the potential of the UKCS.”
The UK continental shelf still has significant oil and gas recovery potential, with up to an estimated 24 billion barrels of oil equivalent (boe) to be found, developed and produced offshore. However, realising this potential will not be without its challenges.
Webb added :“Underlying the current record investment and high activity is a more complex picture. The number of fields in operation 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.
“The industry engaged strongly with the Wood Review from the start. It has acknowledged the need to re-examine the way it does business on the UKCS and recognises the growing pressure for fundamental change to maintain the basin’s competitiveness, attract investment and sustain activity for the next twenty years and more. To maximise the recovery of the country’s oil and gas resource will require a much greater degree of collaboration on the part of both industry and the government.
“We therefore strongly welcome the proposal for a new arm’s length regulator with additional powers and resources. We see this as the necessary catalyst for change, ensuring that the stewardship of the country’s oil and gas 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’ life.”