An oil boss yesterday highlighted the need to speed up processes for North Sea companies with new fields to gain access to pipelines owned by other parties.
Paul de Leeuw, director of strategy at Centrica Energy Upstream, said the industry’s infrastructure code of practice needed to be strengthened to help to maximise output from UK waters.
He added: “It can take up to a couple of years to do an agreement with a third party to gain access to their infrastructure.”
He said this was “way too long” and this timeframe needed to be shortened.
Centrica took over Aberdeen oil and gas operator Venture Production in a £1.3billion deal last year.
The group is also the parent of British/Scottish Gas.
Mr de Leeuw was among speakers at the latest breakfast briefing held by industry body Oil and Gas UK.
Also addressing the 400-plus audience in the Beach Ballroom, Aberdeen, was Alec Carstairs, a senior partner in oil and gas transactions with Ernst and Young.
When asked how the use of North Sea infrastructure could be optimised, he said a coalition was the solution.
Mr Carstairs said: “We need to get all interested parties around the table to make this work. Unless all parties are willing to discuss and agree a way forward, we are going to destroy the industry.”
On the question of a “silver bullet” for obtaining access to infrastructure, he said companies would have to put their individual desires and wishes behind the national interests and the industry.
Earlier this week, it emerged that the UK Government has been asked to settle a dispute between energy companies over the cost of transporting gas through a North Sea pipeline.
Houston-based Endeavour International is the first firm to ask the Department of Energy and Climate Change (DECC) to rule on a price disagreement with Canadian group Nexen.
William Transier, Endeavour’s chief executive, has accused Nexen – operator of the Scott field – of setting unreasonably high rates for transporting gas from its Rochelle project through the Scott infrastructure.
Industry sources have said recent charges for the use of some North Sea pipelines has been as high as $10 per barrel of oil equivalent plus operating costs: a crippling price for many small companies.
DECC, which has the power to set a price for transporting gas through pipelines, is expected to make a decision in 10 weeks.
Paul Dymond, operations director at industry body Oil and Gas UK, said this week: “In negotiations over third-party access to infrastructure, the legislation and the industry’s code of practice allow for companies to submit an application for determination to the secretary of state, so we expected this provision would be pursued at some point. Compliance with the code is reviewed annually and the outcomes of this process inform cross-industry discussions on how best to enhance its use.”
Meanwhile, an energy bill, expected to be introduced by the new UK Government this autumn, could include measures to ensure North Sea infrastructure is available to all companies to help with the exploitation of smaller and more difficult oil and gas fields.
Carl Hughes, head of Deloitte’s energy, infrastructure and utilities practice, has welcomed this possible move.
He added: “To prolong the life of the North Sea and to maximise the recovery of reserves, the current voluntary infrastructure code of practice needs to be reviewed. Consideration could potentially be given to compulsory arbitration, with a fixed timetable to encourage wider and faster access to both ageing and new infrastructure.”
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