UK oil review calls for new regulator to help raise production
BY NIDAA BAKHSH
LONDON (Bloomberg) -- A review of the UK’s oil and gas industry urged the government to set up a new regulator to help increase production in the North Sea as aging fields decline.
The recovery of an extra 3 billion to 4 billion barrels of oil equivalent could add 200 billion pounds ($333 billion) to the economy in 20 years, Ian Wood, former chairman of oil-services provider John Wood Group Plc, said in a report published by the government today. The UK continental shelf has produced more than 42 billion barrels to date.
Britain has seen North Sea output dwindle as fields mature. That’s led to higher deliveries from abroad, driving up costs and raising concern that reliance on imports may reduce security of supply. The government in June appointed Wood to study how to get the most from remaining reserves. Prime Minister David Cameron has promised to implement all the main recommendations.
The UK needs a “more influential regulator to facilitate and encourage collaboration on exploration, cluster-field development and use of infrastructure,” Wood said in the report. The new watchdog, to be independent of government, would advise companies on efficiency, monitor field developments and may also issue licenses, relieving the Department of Energy and Climate Change of some of its duties.
Output from the UK continental shelf has fallen 40 percent in the past three years and the efficiency of producing oil and gas has dropped, costing the economy 6 billion pounds, according to the report. Britain relies on North Sea output for more than half its oil and gas consumption.