UK Oil & Gas Authority Issues ‘Call to Action’


A report published Wednesday by the new Oil & Gas Authority (OGA) has issued a “call to action” in order to protect and sustain the UK’s oil and gas industry.

The report – titled “Call to Action: The Oil and Gas Authority Commission 2015” and authored by Dr. Andy Samuel, the OGA’s recently-appointed chief executive – said the decline in global oil prices “has only magnified the existing challenges for the UK Continental Shelf” as highlighted by trade body Oil & Gas UK’s recent 2015 Activity Survey.

Published Tuesday, the 2015 Activity Survey found that of 3.7 billion barrels of oil equivalent (Bboe) of potential investment opportunities identified on the UKCS only 2 Bboe had been earmarked for development at the end of 2014. The survey also found that operating expenditure on the UKCS rose to a record high on a unit of production basis, while only 14 exploration wells out of an expected 25 were drilled on the UK Continental Shelf last year.

The OGA’s report highlighted two key risks that it said required urgent focus:

  • The risk that the profitability of producing fields will be insufficient to attract continued investment, leading to premature decommissioning of assets.
  • The risk that confidence in the future potential of the UKCS will continue to decline, resulting in critical long-term investment not being committed.

The OGA noted that various reviews carried out by the Department of Energy and Climate Change and the HM Treasury has provided a “clear perspective” on key priorities that must be realized. These include:

  • A cultural shift in the industry is required for companies to swiftly adapt their behaviors to tackle the challenges ahead.
  • The need for fiscal reform.
  • Action to create a more competitive and efficient cost base to ensure the UKCS attracts the necessary investment now and in the future.

The OGA also noted the actions recommended in last year’s Wood Review.

In order to address the specific risk that profitability of producing fields will not be enough to attract continued investment, the OGA said that priority actions should include: the protection of critical infrastructure, significantly improved production efficiency and the creation of a competitive cost base for the industry.

To combat the risk that confidence in the future potential of the UKCS will decline, the OGA recommended: the revitalization of exploration activity, improved collaboration on decommissioning, a drive for more investment, more support for the oil and gas supply chain and the development of people and skills.

Commenting on the OGA’s report Wednesday Scottish Labour’s Shadow Energy Minister Tom Greatrex MP said:

“Today’s report from the new OGA rightly highlights the need for urgent action to protect jobs and investment, from government and from industry. The government must ensure that the fiscal framework is appropriate for North Sea oil and investment in what is a mostly mature basin. 

“But the call to action from the OGA also makes the case that industry must step up to the plate. As I have long argued, the industry work much more collaboratively if the UKCS is to have a sustainable future. For that reason it is also vital that the crucial reforms recommended in Sir Ian Wood’s review of economic recovery in the North Sea, which were pressing even before the oil price crisis, are now implemented as a matter of urgency, and companies operating in the North Sea take that challenge seriously themselves. A collaborative approach which does not compromise safety can only be delivered by operators properly engaging.”

“Today’s report underlines just how serious the situation is for the oil industry in the North Sea. It is vital to the Scottish economy and nobody can now doubt it needs support.”






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