UK Offshore Oil & Gas Industry Collaborates To Cut Costs

Published at 12:40PM - 11/05/15

Oil and Gas UK, a body representing the country’s energy firms has announced a package of measures designed to improve the situation for the ageing fields on the UK continental shelf (UKCS).

The package includes five areas on which oil and gas companies are collaborating: sharing best practice regarding planned shutdowns; building a spare parts database; standardising safety-critical working and training practices; adopting new technology; and creating a survey of daily rates paid to contractors.

Delegates attending an Oil and Gas UK briefing last week heard that while 23 billion barrels of oil and gas equivalent remain to be extracted from the region, the industry faces a range of headwinds, including low oil prices, rising costs and dwindling production. With investment in UK North Sea projects declining, overall UK oil production has fallen from 69.0 million tonnes in 2010 to just to 43.5 million tonnes in 2014.

The organisation described government measures taken to address the problem, such as establishment of a new regulator, the UK Oil and Gas Authority, and the tax reforms announced in the 2015 Budget. However, the industry itself was exhorted to make a concerted effort to control escalating costs.

Oonagh Werngren, Oil & Gas UK’s operations director, said that while individual companies would have to take difficult decisions about their projects and resources, they needed to come together to achieve ‘a more internationally competitive oil and gas province and attract the fresh investment needed to unlock the North Sea’s remaining potential. Achieving this will require a 40% reduction in the industry’s cost base.’