Andy Samuel, the head of the new Oil and Gas Authority (OGA) last night published an “urgent call to action” to the industry and government in the face of the “significant risks” facing the North Sea industry.
The paper was prepared in response to Secretary of State Ed Davey’s demand in January that the fledgling OGA to identify key risks to oil and gas production following a more than 60% decline in oil prices.
The report outlined key risks to the sector as well as the OGA’s top priorities as it becomes the North Sea’s official regulator in April .
Following a drastic decline in North Sea exploration last year, the report claimed the UK government was considering “potential” financial support for seismic surveys in the upcoming Budget.
According to the Oil & Gas UK annual survey revealed earlier this week, exploration activity in 2014 hit a “worrying” all -time low and was set to fall even further this year.
Mr Samuel said the OGA could not achieve his suggestions in isolation.
“Now industry, government and the OGA must build on the positive tripartite relationship which has developed since the publication of the Wood Review, to demonstrate effective leadership and deliver solutions. The future of our oil and gas industry depends on it.”
The OGA said it was taking “immediate” action to protect critical infrastructure.
The top 20 oil and gas producers in the UK will be required to present “stewardship improvement plans” by April of this year.
These will be used to improve efficiency by 30% to 40% following a decade of decline and a five fold increase in exploration costs in the same period of time.
Meanwhile, the body will oversea the development of regional development plans by the end of the year that will ensure they will attract investment as well as offer ideas for potential “fiscal levers” such as tax breaks.
The OGA will also spearhead a “data strategy” that will enforce the sharing of production and exploration data, which was a key recommendation in Sir Ian Wood’s report published last year.
The report describes the risk of a “domino effect” hitting the region’s infrastructure as cash starved producers start decommissioning key platforms and satellite fields too soon.
“Maximising economic recovery from the North Sea relies on maintaining the connectivity and integrity of a complex network of fixed, gloating and subsea production assets, and pipelines between production facilities and the shore.
“Premature decommissioning of certain critical pieces of this interconnected jigsaw has the potential shut down areas of the basin, locking in oil and gas reserves that could be, and should be, produced in order to maximise economic recovery.”
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