Sir Ian Wood, recently retired Chair of the Wood Group, a multi-national engineering services company focused on the energy sector, has published his interim report revealing the economic and energy security opportunities still available from the UK’s offshore oil and gas resources.
The “UKCS Maximising Recovery Review”, the first of its kind in more than 20 years, was commissioned by the government in June 2013 to look at how we could ensure longevity of the oil and gas industry and the UK’s resources.
Sir Ian’s interim report estimates that full and rapid implementation of his recommendations will deliver at least 3-4 billion barrels of oil equivalent (boe), more than would otherwise be recovered from the UK’s waters over the next 20 years, bringing over £200bn additional value to the UK economy. His recommendations include:
a new shared strategy for “maximising economic recovery (of oil and gas) for the UK”, with commitment from the government (HM Treasury and a new Regulator) and the oil and gas industry.
creation of a new arm’s length regulatory body to oversee and develop this programme of change and growth.
The UK’s oil and gas industry is of national importance and makes a substantial contribution to energy security and the economy. For decades the oil and gas sector has been one of the UK’s major industrial success stories, a key contributor to growth, jobs and tax revenue. In 2012-13 the industry paid £6.5 billion in corporate taxes on production, 15% of all corporate taxes in the UK, and supports the employment of 450,000 people across the UK.
41 billion barrels of oil and gas have already been produced from the UK Continental Shelf (UKCS), and 20 billion or more could still to be produced. Sir Ian believes that implementing the recommendations of the review will deliver at least 3-4 billion barrels of oil equivalent (boe) more than would otherwise be recovered, worth £200 billion.
The report comes five months in to Sir Ian’s review with a final report to be published in early 2014.
The second half of the review will focus on strategies to make the most of the economic opportunity offered by retrieving offshore oil and gas, accounting for feedback on the interim findings and further details on the evidence for a new arm’s length body.
Of the report Edward Davey, Secretary of State for Energy and Climate Change said:
“Our offshore oil and gas fields are one of Britain’s great natural assets, and I’m determined that they should stay that way. They are good for our energy security, because if we improve what we’re recovering domestically, we reduce our reliance on foreign imports. They are good for the economy, supporting jobs and thriving communities. And they are extremely good value for taxpayers.
“There are people who would try to talk down their untapped potential, but today’s report shows that with strong, co-ordinated stewardship by the UK Government, working in partnership with world-class operators, we can boost future returns by at least £200 billion – and potentially much more.”
“This report has given government and industry alike plenty to think about, and I’m looking forward to receiving Sir Ian’s report and setting out our plans to make the most of our offshore oil and gas fields in the New Year.”