Amid growing concerns that ageing offshore infrastructure is creating “unprecedented challenges”, the Department of Energy and Climate Change (DECC) have announced an independently-led review into the UK continental shelf, spearheaded by the well-respected Sir Ian Wood, recently-retired chair of Wood Group, a leading UK oil services company.
Sir Ian’s task is to consult with the government as well as industry leaders on key lines of inquiry in order to produce robust analysis, conclusions and recommendations for improving future economic recovery of UK Continental Shelf oil and gas.
The industry supports 440,000 jobs directly or indirectly and paid£11.2 billion in direct taxes in 2011 – 2012, almost a quarter of all corporation taxes received by the Exchequer. Investment in the UK Continental Shelf has risen substantially in recent years, and investment in 2013, up to £14 billion, will reach an all-time high.
Some 41 billion barrels of oil and gas have already been produced from the UK Continental Shelf but 20 billion or more could still to be produced.
2011 Tax Changes Excluded
Since 2011 there has been a range of changes to the oil and gas tax regime which the industry has welcomed and which has led to significant new investment. However it is too soon to review the effectiveness of these changes and therefore the review will focus on other factors such as optimising the use of the UK North Sea's energy infrastructure, the extensive systems of interlinked offshore platforms and pipelines and extending the life of these assets.
The review will focus on:-
- the licensing regime,
- optimising use of and extending life of infrastructure,
- production efficiency,
- better collaboration across the industry,
- increasing the exploration effort
- and maximising the use of enhanced oil recovery techniques.
The review will also consider the current structure, scale and effectiveness of the Government stewardship regime given the technical and commercial complexity in what is now the mature phase of the UK continental shelf.
DECC expects emerging conclusions from the review to be published in the autumn and the final report and recommendations to be published in early 2014.