Govt to fast-track Wood Review to boost UK oil and gas

Tuesday 25 February 2014

UK limited companies in the oil and gas sector will no doubt be welcoming the news that the government is to fast-track key proposals from the Wood Review.

It was announced yesterday (February 24th) that important tenets from the report, which argues North Sea oil and gas could be worth up to £200 billion over the next 20 years, have been accepted and will be implemented swiftly.

The government claims that this will allow them to support the industry in recovering three to four billion more barrels of oil than would otherwise have been produced.

Prime minister David Cameron said: "For many years the UK has supported the North Sea oil and gas industry and we have worked together to make this an economic success the whole country can be proud of.

"I promise we will continue to use the UK’s broad shoulders to invest in this vital industry so we can attract businesses, create jobs, develop new skills in our young people and ensure we can compete in the global race."

The government is well placed to support the industry and make it profitable for companies to go after hard-to-reach oil and gas.

It has already launched several initiatives to ensure the sector has the backing and tax environment needed to thrive. These include a £3 billion allowance for large and deep fields and a £500 million allowance for large shallow-water gas fields.

Officials have also made clear their intentions towards decommissioning relief worth £20 billion, giving greater certainty to the industry.

Such schemes have helped to unlock billions of pounds of investment thus far and the government claims it will help guarantee the profitability of North Sea oil and gas for decades. This will create stability, allowing the industry to plan and invest.

Among the measures from the Wood Review that the government will take forward is the creation of a joint commitment between officials and the industry to ensure production licenses are awarded to allow the maximum amount of petroleum to be recovered from UK waters as a whole, as opposed to just each individual licensing block.

There will also be a focus on greater collaboration, including sharing of infrastructure and geophysical information.

Meanwhile, a new independent regulator will be established to ensure maximum collaboration is taking place and to supervise licensing.

Edward Davey, secretary of state for Energy and Climate Change, explained that it is important to reverse the recent declines in North Sea production to ensure the UK can meet its oil and gas needs.

"Since oil and gas was first discovered in the North Sea, 42 billion barrels have been recovered. However whilst short-term prospects are good, with investment at record levels, the UK Continental Shelf faces unprecedented challenges," he said.

The changes will help businesses overcome barriers to oil and gas recovery, ensuring they can deliver the volumes needed by Britain, grow and support jobs.

Mr Davey maintained that the industry already employs 450,000 people and will be able to sustain this when the Wood Review recommendations are rolled out.

By Victoria McDonnell

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