As 2017 progresses, the Oil & Gas Authority (OGA) will have a lot on its plate as it clarifies expectations, identifies priorities and grows more confident in applying its powers.
The organisation, which works with government and industry to make sure that the UK gets the maximum economic benefit from its oil and gas reserves, has a number of new initiatives about to come to fruition which are aimed at delivering further efficiencies within the sector.
Following its consultation on changes to the standard clauses incorporated into offshore production licences, the OGA will now consider industry responses. Potential changes include amending licence commencement dates, adding new licence extension provisions and fully implementing a plan to grant more flexible ‘innovate licences’.
Responses for the OGA’s first Annual Stewardship Survey are also due on February 17. This exercise replaces nine existing surveys run by multiple organisations which should reduce time and effort for operators. The survey results will underpin all aspects of OGA’s work, including informing asset stewardship reviews, allowing robust economic modelling of UKCS fields and the development of regional strategies and area plans. The overall aim of the survey is to boost the industry’s efficiency by benchmarking operators to help them focus on performance improvements and reduce operating costs. The OGA was aiming to see production efficiency at 80 per cent by the end of 2016 (we have yet to see whether this ambition was met) and cuts in overall operating costs of 30% by 2018, although some will have more scope for cuts than others.
In amongst all this activity, the OGA is also planning to release a draft consultation in the early part of this year covering new regulations for the retention and publication of information and samples by industry. This will include limitations on the OGA’s disclosure of information given to it by licensees and operators. Associated guidelines to replace PON 9, the requirements and licensee reporting obligations regarding offshore well and seismic data, are also expected.
Moving forward to next month, on March 7 bidding closes for the 14 licence blocks on offer across the UKCS, adding to those in the last licensing round which closed last October and are expected to be announced ‘as early as possible’ in 2017.
The OGA has already awarded around £1million in contracts to supply more than 10,000 kilometres of seismic data of the UKCS. This data, which is scheduled to be released to the industry later this year, will have the potential to unlock areas that have not been explored for decades and will be assessed in determining areas to be covered in future OGA licensing rounds.
Decommissioning is, of course, another key priority in the year ahead with the OGA due to publish its preferred approach in gaining an accurate estimate for overall costs, before then looking at how these can be reduced going forward.
This is an ambitious agenda for the UK’s oil and gas regulator which will make 2017 an important year in determining the future course of the industry.
Judith Aldersey-Williams, partner at law firm CMS
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