Last week I was pleased to chair the very first Oil & Gas UK Annual Conference.
Not only was it a first for Oil & Gas UK’s but it also went straight to the top of the charts as the biggest conference of its kind for the UK oil and gas industry in 2014. Perhaps that was not surprising, given the many leading figures from government and industry who generously gave their time to introduce two days of highly topical discussion and debate.
The Conference gave us the opportunity to consider a huge diversity of topics relating to the next phase operations on the UKCS. Our discussions ranged from exploration to production efficiency and from rejuvenation of infrastructure to thought-provoking sessions on health and safety and the environment.
Crucially, we focused on how we might improve the current outlook.
I said when I opened the event that radical change is needed if we are to maximise economic recovery from the UK offshore.
I stand by that statement and indeed in the confidence I was joined by many of our members, industry experts and political leaders who expressed that same sentiment.
Capital expenditure may be at an all-time high but exploration is in crisis, our cost base is increasing and average productivity levels continue to fall. We simply cannot go on like this. Things must change and in a radical fashion.
We are therefore fortunate to have the blueprint of Sir Ian Wood’s Report and we are encouraged by the Government’s recent announcement of a wide scale review of oil taxation.
In his report, Sir Ian calls for substantially increased levels of collaboration across industry and government and the creation of a new arm’s length well-resourced regulator to act as the facilitator for the much needed changes in behaviour and outcomes.
The Wood Report has cross party support, industry support and will be enshrined in legislation next year. The Government’s taxation review is now underway and we will look forward to its completion around about the year’s end. The industry similarly has to embrace this spirit of change and adopt new, innovative and collaborative approaches to the challenges which face us.
It was encouraging to have such high profile representatives from both the UK and Scottish Governments speaking at the event. First Minister Alex Salmond opened the Conference with his vision for the industry north of the border – emphasising the importance of consultation, stability and stewardship – and of Aberdeen as the home of our industry. Then, on the next day, Chief Secretary to the Treasury, Danny Alexander, again spoke of the importance of the industry and in confirming the Government’s support for the Wood Report, he announced the name of the new regulator– the Oil and Gas Authority – and that its HQ will indeed be here in Aberdeen.
The most powerful impression I take away from the two days of this first conference was the enthusiasm for collaboration within our industry which was so clearly present in so very many of the speeches, presentations and debates. One speaker commented: “the Wood Report is already in action”.
At the end of the conference we conducted an experiment. In the ‘The Conference Decides’ session, delegates voted on the major themes debated in the conference. Time does not permit me to list all outcomes but let me pick out just two. A full 88% agreed that industry collaboration will increase production and 93% agreed that a well-resourced arm’s length regulator is now required.
This alignment of view, on a truly impressive scale, bodes well for the future. Oh and yes, there was one other vote I might mention: 93% of the audience agreed that it had been a good conference and that we should do it again.
So, see you next year!
Malcolm Webb is chief executive of Oil & Gas UK
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