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Page 23: of Offshore Engineer Magazine (Apr/May 2014)
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Analysis
The Wood Review proposes a new regulator for the North Sea. Elaine
Maslin looks at Sir Ian
Wood’s recommendations and why a regulator is necessary.
A North Sea watershed early 50 years after are woefully low. increasing exploration will recover. In 2013, there were the ? rst major dis- The Wood Review was be keys to the basin’s future 15 wells drilled, discovering
N coveries in the North commissioned to assess the success. just 80MMboe. The fear is
Launching the ? nal recom-
Sea, the basin’s UK industry situation and propose solu- that, if exploration drilling me is facing what representa- tions. It was commissioned by ndations from the review does not increase, known and tive body Oil & Gas UK has UK Energy Minister Edward in Aberdeen in February, Sir yet-to-? nd reserves will be described as a watershed Davey last year, after a sharp, Ian, founder and former chair- lost, because infrastructure moment. three-year decline in produc- man of engineering services will no longer be in place.
The industry is visibly tion and exploration drilling group Wood Group, did not Further, ? elds that are buoyant. Aberdeen, the UK’s on the UK Continental Shelf mince his words. He said the found now tend to be smaller, operational center, is boom- (UKCS). industry was “individualis- with more complex owner- ing: North Sea investment hit
The ? nal report, Sir Ian tic,” and had seen too many ship, and the ability to agree its highest in three decades, at
Wood’s “UKCS Maximising “failures, disputes, and lost on access to third party infra- £14.4 billion (US$24 billion) in
Recovery Review,” includes opportunities.” structure notoriously dif? cult. 2013, and recruitment is high. recommendations to set up “The current rate of
The backdrop – production
However, recent events—the a new industry regulator. He exploration drilling is totally falls, costs rise ? nal Wood Review report and says indus- inadequate to exploit the
Oil & Gas UK’s 2014 Activity try col- Production in the UKCS has undiscovered potential of the
Survey—have highlighted that laboration, fallen 38% over the past three UKCS within the lifespan of all is not well. regional years. Exploration drilling existing infrastructure,” Sir 2013 UK North Sea produc- hub fell to a record low in 2011, Ian’s ? nal report warns. “To tion was 1.43MMboe/d—the develop- with just 14 exploration highlight the size of the chal-
Sir Ian Wood lowest it has been since 1977. ments, and wells drilled, and it has yet to lenge, based on exploration
Yet, in 1977, all the produc- performance seen over the last tion came from just seven 4-5 years, the review estimates ? elds. Today, the same level that less than 3 billion boe of production comes from will be discovered by 2030. 346 ? elds, ? gures highlighted Even increasing exploration recently by James Edens, vice drilling back to that seen prior president and managing direc- to 2008 will only lead to an tor of CNR International (UK). additional 1-1.5 billion boe
The record-high spending is being discovered by 2030. A expected to halve by 2016- step change in approach is 17, according to the Activity needed.”
Survey. Operating costs have
The exploration challenge risen painfully more than expected, and will continue Oil & Gas UK’s Activity to do so, and exploration rates Survey, published days after
Sir Ian Wood’s “UKCS Maximising Recovery Review: Final Report” oedigital.com April 2014 | OE 25 000_OE0414_Analysis-Wood.indd 25 3/23/14 9:16 AM