Rather than quaking at the prospect of being slapped with a fine, North Sea firms are glad the Oil and Gas Authority (OGA) has been armed with new powers, the regulator’s boss said.
OGA chief executive Andy Samuel said companies had every right to ask the regulator to wield its newly-bestowed arsenal against their counterparts to resolve disputes quickly.
But Mr Samuel also said he was more encouraged firms were displaying the right attitudes than was the case a few months ago, and hopes not to have to start using a stick where a carrot should suffice.
The OGA’s transformation into an independent government company, which was completed on October 1, lets the regulator use powers set out in the Energy Act, including dispute resolution, access to companies’ meetings and sanctions.
It means the OGA has been given teeth at a time when the North Sea needs firm stewardship.
A report published last week by industry body Oil and Gas UK confirmed the North Sea will have lost 120,000 jobs by the end of the year.
Mr Samuel said: “Industry is telling us we’re really glad you’re getting these new powers because we’re looking forward to seeing you use them.
“What we’re looking for now is pace. If people have got valuable licences, we want to see investment. If there’s investment being blocked that should go ahead, we’ll use our powers. Equally, industry has a right to ask us to use those powers, so it works both ways.”
But Mr Samuel said that while the new tools will be useful, the old teeth had been working quite well, too.
He said the OGA managed to resolve three “tricky” issues in the last few months by sending out formal letters, a step it could take before it gained government company status.
The letters, which were intended to help companies “see the bigger picture”, referred recipients to the legally binding obligations set out in the MER (maximising economic recover) UK strategy.
One of the impasses was to do with drilling and two were for asset transfers. A fourth regarding an area plan is still being sorted out.
Mr Samuel said the first three problems had been fixed without unduly upsetting anyone, and that they would have taken far longer to clear up without the OGA, whose creation was a recommendation of the Wood Review.
“I think if you get a letter from someone very senior in the Oil and Gas Authority it puts it (coming to an agreement) up the priority list,” he said.
Furthermore, the OGA used existing powers to settle five cases relating to applications for third party access to North Sea infrastructure in recent times.
Mr Samuel said: “The last case we handled took seven weeks. That’s a good pace and we ended up with a happy customer. We’re trying to get the message out that if there are real barriers, you should come to us.”
Only one of those instances required the OGA to impose terms. That intervention was related to OMV’s application to use infrastructure linked to the Nelson platform on Shell’s Howe field.
Mr Samuel said some investors had been put off the North Sea by a misconception that commercial issues can make it too difficult to gain third party access.
He hopes the OGA’s recent successes will change their way of thinking.
Mr Samuel said the fact that most cases had been put to bed without terms being imposed could mean much of the OGA’s new weaponry won’t be needed.
Sanctions enforceable by the OGA are graded from private warnings and public enforcement notices, all the way up to financial penalties capped at £1million, operator removals and licence revocations.
Mr Samuel said: “I hope we only have to go so far before people come to an agreement because that will be a lot more efficient.
“That may mean there won’t be much being made public and from our perspective that’s fine because we’re not here to name and shame. We just want to achieve MER UK.”
Recommended for you
