A new regulator for the UK’s ailing oil and gas industry is urgently needed for it to survive, according to expert Sir Ian Wood’s new prescription.
The industry veteran said the North Sea was at a “watershed” moment as he unveiled his final report on maximising recovery from the UK Continental Shelf.
He said most, if not all of the 24 billion barrels of oil which remain out there can be reached if industry and government work together.
And he reaffirmed the key recommendation of his interim report last November calling for the creation of a new arm’s-length body paid for by industry to make companies work together in exploration, development and production across the sector.
Sir Ian said it should be possible to deliver at least three to four billion more barrels over the next 20 years worth around £200 billion to the UK economy.
However, the existing light-touch regulatory framework was no longer suitable for an environment where there were now more than 300 fields, many of them marginal, competing for the use of an ageing infrastructure.
“There is a huge prize at stake and I believe government must implement the key recommendations, including the creation of a new regulator, as quickly as possible,” he said.
After spending eight months interviewing oil bosses, ministers and foreign regulators, he has made four key recommendations.
The main one is that government and industry immediately set up a new North Sea oil and gas regulator which will focus on securing the maximum amount of economically recoverable oil from UK waters.
He also wants government and the industry to commit to a new strategy to maximise recovery.
Ed Davey, the Energy Secretary, last night hailed the publication of Sir Ian’s review as a “seminal moment” in the history of Britain’s oil and gas industry.
He said the Government had accepted Sir Ian’s recommendations in full, would fast-track its implementation and the new body could be partly in place by the end of the year.
Companies who fail to act in a manner designed to maximise output from the UKCS could lose their production licences.