Sir Ian Wood’s interim report on the future of the UK North Sea really is a damning indictment of both the industry itself and government.
It would seem that little has escaped his steely eye as he seeks to build of picture of where we are now and where the North Sea must go if the £200billion estimated further prize is to be realised.
Make no mistake, we cannot afford to let this opportunity be squandered by either side… industry or government. As I have said on various occasions over the past couple or so years, this is the third time that the North Sea has provided Britain with an economic liferaft.
However, this incredibly important liferaft has a serious leak; and the evidence is plain for all to see. It’s called plummeting production coupled with pathetic exploration.
Yes new records are being set in terms of expenditure and yet the raft carries on deflating; with little sign of slowing even though there is an Indian Summer’s worth of big developments under way and due onstream over the next two to five years or so.
It is absolutely frightening the manner in which politicians and the Treasury have played fast and loose with the North Sea especially over the past 10 years and despite stern warnings from the industry’s leadership and others, including the P&J.
It is just as terrifying that, for 20 of the 23 years that I’ve been scribbling about the oil and gas industry and tried to understand it, there have been overarching initiatives created largely by its leadership in a bid to get smarter at keeping the North Sea oil and gas industry rolling along … delivering precious revenues into Treasury coffers keeping many thousands of people in well-paid jobs and even enabling a modest number of genuinely British companies to prosper.
So what’s everyone been doing? What on earth was the point of the Cost Reduction Initiative for the New Era (CRINE), successor CRINE Network, the Oil & Gas Industry Task Force, plus Pilot etc, given the mess that is portrayed in the Wood report.
There are many choice lines in the interim UKCS Maximising Recovery Review report; but the one that staggers me the most is this: that the North Sea is perceived as being “one of the most difficult and adversarial legal and commercial basins in the world disproportionately driven by risk aversion to the detriment of value creation”.
That is shocking.
Goodness knows what else might emerge when the full report is ready.
Recommended for you
