Dwarfed by the majors and super majors, the impact of the small independent oil company on global exploration and production activity is often overlooked.
But, these companies are driving increased production in mature provinces such as the UK Continental Shelf (UKCS), grasping opportunities to maximize the returns from mature fields.
These are opportunities that can be lucrative for smaller firms, but are being passed-up by global oil companies, who see little value in such ventures.
It is these same smaller companies who are taking the initiative in exciting new frontier regions, unearthing large reserves and increasing global production rates in the process.
But there are challenges.
For companies focused on exploration activities, a supportive fiscal regime is a critical factor in planning future activity. A strong fiscal stimulus drives down the effective cost of exploration projects, attracting investment and maximizing exploitation of the region—something the UKCS has yet to achieve and an important challenge for government to address.
The challenge for independents is accessing the funding necessary to carry out E&P activities, or to acquire a stake in a producing asset—a challenge exacerbated by ever increasing operating costs in mature areas, like the North Sea.
The approach from the investment community is a threat, not only to these companies, but to the overall growth of the industry. The lack of financial investment affects the independents’ ability to undertake E&P activities, resulting in under-exploitation of mature basins and new frontiers.
Asset Development and Improvement (ADIL) is hosting tomorrow’s SPE OFfshore Europe keynote session, The independent oil company—Mighty oaks from little acorns grow (Gordon B, 10am-12.30pm), to address the opportunities and challenges these companies face.
The keynote speech will be by Tony Hayward, CEO of Genel Energy. He will be followed by Simon Flowers, head of corporate analysis, Wood Mackenzie; Tom Reynolds, CEO, Bridge Energy; Simon Toole, director of licensing, exploration and development, DECC; Graham Stewart, CEO, Faroe Petroleum; and Dr Marcus Richards, group chief executive, Dana Petroleum.
The conference aims to raise awareness of the role of the small independent E&P company in maintaining a strong supply of oil and gas within the UKCS, at a time when global demand for the commodities is increasing.
But, while there have undoubtedly been success stories, there is recognition that there are obstacles, which must be overcome to ensure the continued buoyancy of the energy sector within the UKCS. We must all work together to find a way forward.
By James Paton, managing director, ADIL (pictured).
ADIL, founded in 2006, is an integrated development and operations management business. It provides full field development and operations services to operators, including project management from concept to development and production. It has worked on Premier Oil’s Solan project and Dana Petroleum’s Western Isles project, both in the North Sea.
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