The new oil and gas regulator to be set up on the back of the Wood Review will spearhead the hunt for oil off the Hebrides, it has emerged.
Among the 29 action points drawn up by Sir Ian – which have been backed by Prime Minister David Cameron – is a plan to “make the most” of new plays around the coast of the UK.
He wants the new body to “work closely” with the industry and the Treasury to evaluate new areas – including west of the Hebrides – and help “ensure they are explored and developed”.
He said it was apparent that there is a reluctance amongst many explorers to pursue the region – something the new regulator needs to tackle.
“This (reluctance) reflects lack of good seismic data and geological information, insufficient sharing of existing data and geological information, and the inherent commercial risk of these highly uncertain opportunities,” he said.
“The regulator has a unique role to help facilitate new play opening activities such as West of Hebrides and should actively seek to create and encourage joint ventures to pursue such opportunities.”
Energy Secretary Ed Davey said yesterday the new body will be operating by the autumn and a chief executive appointed by the summer of this year, with the necessary legislation for the establishment of the new oversight organisation being brought before the next session of Parliament.
The incoming boss will be met with a substantial to-do list, drawn up by Sir Ian.
One of the first issues will be where to locate it. Sir Ian said yesterday that 75% of the current department’s work is done in Aberdeen, and that it would make sense for the new body to gravitate towards the north-east.
But the Scottish Government has suggested the new regulator could be split between Aberdeen and Glasgow in the event of a Yes vote in September’s referendum.
Another issue is funding. Sir Ian believes it will have to be funded by industry, but that may face opposition from companies which are already heavily taxed.
Stimulating exploration will also be a key issue for the new body. The new boss will also have to harness new powers.
The chief executive will be able to force firms to share information – and even assets – for the greater good of the UK Continental Shelf. Those failing to do so could face tough new penalties, and could even lose their licence.
Sir Ian said: the development of the UKCS must continue to be led by the operators, who “provide the significant investment of funds, expertise and experience”. “The proposals and limited new powers are much more about stronger and better stewardship, establishing standards and procedures for collaboration and dispute resolution, as opposed to more regulation,” he said.
“The new Regulator’s role will be licensing, supervision and stewardship. It must be low in bureaucracy, high in skills and experience, and strong and pragmatic.
“It must be the catalyst for maximising the economic recovery by facilitating, co-ordinating, mediating and promoting collaboration, removing barriers, and encouraging more efficient exploration, development and production.”
Watch our interview with Malcolm Webb, chief executive of Oil & Gas UK, sharing his thoughts on the new regulator.
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