After a slow, considered, start we are now finally beginning to see some real, practical detail around how the Oil and Gas Authority (“OGA”) intends to achieve MER UK. There are of course still many unanswered questions but the “MER in Practice” day held by OGA at the AECC on 25 October and the substantial amount of guidance published over recent weeks starts to give us a much clearer picture. Indeed, those who felt that the MER UK Strategy which came into force in March did not give the desired insight into what MER would mean in practice now have quite a volume of information to review. We now have seven strategies covering:
- Asset Stewardship;
- Decommissioning (see our earlier comments here);
- Enhanced Oil Recovery;
- Information Management;
- Supply Chain; and
Three of those strategies have accompanying Delivery Plans, with more on the way, and we now also have more detail on Asset Stewardship Expectations (as will be considered in an upcoming Law Now). A consultation document on Information Management is expected, along with new regulations in the early part of next year, as well as some guidance around the vexed topic of competition law…
However, OGA has not been waiting for the paperwork to be published before starting work – we are told there have been more than 70 successful cases of facilitation or intervention involving OGA including “new discoveries, extensions of fields, unblocking of commercial issues, cost savings and improved plant operations”. Details of many of these have not been made public but there is a sense that the mere threat of intervention by OGA may be sufficient to galvanise activity in some cases.
The importance of communication and conversations between industry and OGA was emphasised at the conference, along with OGA’s intention to be flexible and practical in its approach – for instance, it indicated a willingness to consider alternative drilling proposals in lieu of firm well commitments to ensure that the most prospective targets are drilled quickly and to fast-track applications to allow work to start with minimal downtime or standby costs.
Nonetheless, OGA has equally made clear that it will not wait indefinitely for companies to make progress where it considers that there are steps that could and should be taken – the message was that although the sanctions regime may not be OGA’s primary focus, it is also not simply a ‘last resort’. To what extent that can remain the case may depend upon how much actual collaboration, cooperation and engagement comes from industry. That in turn may be linked to whether OGA’s involvement in industry matters over the next few months (for example, its attendance at meetings such as OCMs and TCMs and whether that is found to be helpful) inspires the trust and confidence of the industry that will be necessary for the new regulator and the existing industry to properly work together to achieve MER.