The chief executive of Oil & Gas UK today called on the wider industry to learn lessons from the historically “tight ship” run in the southern North Sea.
Deirdre Michie said costs had increased in the region over the course of the downturn whereas in other parts of the UK Continental Shelf they had been reduced.
But she insisted this could be explained – in large part – by the fact there was “less fat to cut” in the first place.
Addressing the annual Southern North Sea Conference in Norwich, organised by the East of England Energy Group (EEEGR), she said: “We believe this cost increase may be largely due to the fact that operations here have historically been more efficient than in other parts of the basin.
“So when the oil price grew, the cost base didn’t inflate like it did in Aberdeen and the north-east of Scotland.
“The southern North Sea has actually done quite a good job of running a tight ship so there is less fat to cut.
“I strongly believe … that other parts of the industry have a lot to learn from your approach.”
The total number of fields in the southern North Sea expected to cease production between now and 2020 has been revised up to 51, almost half of those operating in the sector.
Ms Michie also pointed to the current lack of investment in exploration, adding: “It means of course we are not replacing the production we have today.”
But she said there was “still much to play for”, predicting “real pockets of sunshine” amid the gloom and emphasising the need to maximise the economic recovery.
And she pointed to the potential offered by decommissioning and the “business opportunity” it presents.
More than £1.5billion is due to be spent on decommissioning between 2015 and 2024, she said, with that number likely to increase.
She added: “The southern North Sea does have the right ingredients to become a centre of excellence for the UK and to develop that into a robust global export market.”
Ms Michie also hailed the regional task force offering businesses a £300,000 package of support to help them through the downturn caused by the collapse in the oil price.
Pointing to the huge job losses and resulting impact on families, she said there was a “moral as well as business” imperative to act.
At the conference, which is taking place today (Wed) and tomorrow (Thurs), Oil & Gas UK signed a memorandum of understanding with the EEEGR.
It means the industry body will have a hot desk at the EEEGR offices in Great Yarmouth and the EEEGR a presence in both Aberdeen and London.
Ms Michie said she was “really appreciative” of the cooperation agreement and added: “I do recognise we have a really strong role (to play) to reinforce the visibility and contribution this region makes to the industry.
“You have managed the challenging times very effectively and we got a lot to learn from that.”
The chief executive also called for Chancellor George Osborne to help support the North Sea oil and gas industry in this month’s budget.
Michie said she believed the Treasury had been listening and was “quite open” to the evidence-based arguments.
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