At the outset of the plenary session Tuesday morning, conference chair Malcolm Webb led the room in a moment of silent reflection for the victims, survivors, families, and rescue personnel involved in the helicopter crash off Shetland last week.
Fiscal regime
Webb noted that North Sea investment will reach £13.5 billion this fiscal year, and stressed the need for stable policy and fiscal predictability in long-term planning for continued investment.
Rt. Hon. George Osborne, Chancellor of the Exchequer, said “The future is about volume and value,” citing current North Sea projects by Statoil (heavy oil at Mariner), CNR (Ninian), GDF Suez and Centrica (Cygnus gas). Government and industry have a shared interest in maximizing returns from the North Sea; collaboration improves economic viability and economies of scale.
He touted new tax reliefs extending small field allowances, shallow-water gas and brownfield allowances, and a new scheme to underwrite decommissioning costs.
Osborne was heading offshore to Talisman-Sinopec’s Montrose platform. Originally scheduled for decommissioning in 2017, the partners opted instead to invest £1.6 billion to extend production through 2030.
On Scottish independence, he said, “We’re better together.”
Sam Laidlaw, Chief Executive of Centrica, discussed major areas of change in the energy markets, affected by global economics and the importance of LNG. Oil and gas prices are de-linked, he said; although they have similar cost structures, they offer different value streams. Laidlaw noted an overall decline in exploration, making it doubly important that fields are not prematurely abandoned and pipelines are kept accessible for small field developments.
Andrew Gould, Chairman of BG Group, noted that 698 fields have been discovered and 407 of those started production in the North Sea, with 41mmboe extracted in 46 years. But it’s always been a high-cost basin and industry needs a step-change to reduce operating costs and remain competitive, he said, particularly in estimating reserves and enhancing ultimate recovery. Gould suggested using automation technology to reduce staff offshore, with enhanced monitoring and remote management of production platforms, and more shared infrastructure, such as a subsea power grid.
Bob Keiller, Chief Executive of Wood Group, tied up the session with a contractor’s view of the future supply chain. Successful companies stress personal and process safety, are good corporate citizens, remain ethical in all transactions, and develop enduring and mutually beneficial client relationships. He also bravely mentioned an industry-wide need to re-baseline salaries.
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