As we begin another year, I find myself in reflective mood – perhaps more so than usual.
Whilst storms Barbara and Conor made Christmas travel a challenge across the UK, I have been reflecting on how well our industry is weathering its own storm and on where we are on our journey to transform the competitiveness of the North Sea.
I think our achievements in some areas over the past 2 years have been extraordinary and are truly testament to the talent and “can do” attitude of the people working in our industry.
We should acknowledge and celebrate the tremendous progress that has been made in areas such as production efficiency, facilities reliability and waste elimination – helping us to reset our cost base to reflect the environment we need to compete in.
BP’s average production cost per barrel for its North Sea operations, in line with the basin average, is now around $16-17, down from a peak of over $30 per barrel. I am proud of that achievement and proud of the teams that have delivered it.
As I have said previously, I am both cautiously optimistic and excited about the future.
That doesn’t mean that I am not realistic about the challenges that undoubtedly still lie ahead however.
Further industry contraction is probably unavoidable if the basin is to set itself up for future success and activity levels across much of the supply chain remain a concern. We shouldn’t underestimate the human, as well as business, impacts of this correction.
Similarly, following the tragedy of Piper Alpha, the North Sea became the pioneer in progressive safety practices, but I think something of that pioneering spirit and pride in being the best, has been lost. We need to get it back. Other provinces have been more successful in turning good practice developed here, into great safety performance.
The new ways of working and cross-industry partnerships that have evolved out of crisis need to be built upon. We need to nurture the growing culture of collaboration and continuous improvement and encourage it to flourish to become part of our DNA.
And that culture probably needs to include more creative collaboration within the supply chain as well as between operators or between operator and tier 1 supplier.
We should open our eyes to the possibilities of new technology, not solely to help us find and recover new oil and gas, but to modernise the way we run our assets. The transformation that the automotive sector has made in the areas of digital, automation and reliability, need to be replicated in the North Sea. Whilst recognising some great innovation across our sector, fundamentally we still operate in much the same way as we did 20 years ago.
The recent modest increase in the oil price has been welcome, but we can’t afford to relax our effort or ‘hold out’ for price recovery. We must continue to take the steps necessary to make the North Sea competitive in a sustained $50 environment – which we must plan for as the new ‘normal’.
In summary, as we start the New Year, we should take confidence from the extraordinary progress that we have made over the past couple of years.
We need to recognise however, that to become the best, to remain competitive and to realise the full potential of this great oil and gas province, we need to stay ever-restless and dissatisfied with the status quo.
I genuinely believe we have put ourselves in a great place to succeed in that quest.
I’d like to wish everyone a happy, prosperous and safe New Year.
Mark Thomas is BP’s North Sea president and this week’s Energy Voice Guest Editor.
Recommended for you
