 Technology from Europe:
United Kingdom
DTI's Timms sees reasons to be optimistic
Stephen Timms is Minister for Energy, E-Commerce and Postal Services within the UK Department of Trade and Industry (DTI) in London. He is responsible for energy, sustainable development, e-commerce, communications and information, postal services and corporate social responsibility.
Question: Minister Timms, what is the mission of your office and DTI on behalf of the UK upstream industry?
Answer: In the UK, we work closely with industry to ensure that the UK Continental Shelf (UKCS) remains competitive. We must encourage continued activity and investment from existing and new players, and maximize economic recovery of remaining resources. Working together, we can discover, and produce, every drop of economic oil.
Q: How should Britain shape its energy policy?
A: We are taking a dynamic approach to ensure sustainable energy supplies. Our “Energy White Paper” last year was the first comprehensive statement of UK long-term policy for over 20 years. It was bold, setting four goals:
- Maintain supply reliability
- Promote competitive markets
- Ensure that every home is adequately and affordably heated
- Position ourselves to cut the UK's CO2 emissions 60%, by 2050.
It is important that we achieve all these goals. It would be a very serious failure to give up one, just to achieve another. The package is designed, and must be delivered, as a whole. More information on energy strategy is on our DTI website: www.dti.gov.uk/-energy/sepn/index.shtml.
Q: Were you satisfied with last year's E&P market in the UK?
A: Without doubt, we must encourage more exploration. However, during 2003, we saw a small increase in UK exploration and appraisal (E&A) wells drilled, to 45. This is still rather low, but there are some encouraging signs, such as Broom field. There, new entrant Challenger worked with the established operator of a nearby, mature field (Heather), to invest in appraising the long-fallow discovery and then developing it. This is about more than the number of wells drilled; it is also about quality. We are working with industry to ensure that the highest-quality geological interpretation is used to achieve the highest success rates possible.
Also, after consulting industry, Treasury announced a tax change to stimulate North Sea exploration by companies without current taxable income. The Exploration Expenditure Supplement (EES) will increase the E&A expenditure amounts that can be carried forward, for up to six years, effective January 1, 2004. It is important that we set the right investment climate and ensure that business opportunities remain.
Q: How well have the Blair administration's efforts to encourage more upstream participation succeeded?
A: You refer, of course, to the government/ industry forum, PILOT, which was set up in late 1998 at a time of deflated oil prices. It was asked to find ways to keep the North Sea competitive, and encourage continued investment. There have been several initiatives to this end, including:
- Enhanced licensing, including introduction of a “Promote” license (at 10% of traditional license cost)
- Encouraging relinquishment of fallow acreage that can be re-offered
- Looking for ways to enhance output from existing brown fields
- Tackling skills shortages
- Encouraging new players
- Better geo-technical data access
- Reinforcing the commercial code of practice, to enhance UKCS asset changes
- Voluntary measures to ensure third-party access to infrastructure on fair and reasonable terms.
These initiatives are already garnering positive reaction. Response to 2003's 21st Offshore Licensing Round was the best in years – 89 licenses awarded, including 53 Promote licenses. The mix of companies was striking – well over half are small independents, nine have not previously held licenses, and seven are entirely new.
Q: What level of E&P activity and business do you expect for this year?
A: Early indications suggest that more E&A wells will be drilled. We always strive for more, and for improved quality. As for exploration, I look forward to seeing which Promote licensee is first to deliver a firm drilling commitment.
Q: What role does your office play in E&P tax policies and access to exploration tracts? How do you feel about outspoken oil company views?
A: DTI works closely with the industry through PILOT to make necessary changes to regulations, to enhance the North Sea's commercial climate. It is important that the industry has a voice. Within the recent working groups set up to look at barriers to exploration, companies have been fully engaged in discussing tax and non-tax issues. And government has listened to industry, as the recent EES illustrates.
We are developing our licensing system further. We recently opened the 22nd Offshore and 12th Onshore Licensing Rounds, which include a new license type, “The Frontier License,” for blocks in the Atlantic Margin, west of the Shetland Islands. This license allows companies to apply for relatively large amounts of acreage at reduced costs in challenging frontier areas. Licensees in these blocks will have more time for exploration and development, reflecting technical challenges. I hope we will see an enthusiastic response to this new license.
Q: What are some DTI initiatives underway to help UK firms globally?
A: This ranges from supporting development of the oil, gas and renewable energy sectors at home, to helping firms tap into new investment/ export opportunities overseas. Subsea UK, for example, brings together operators, suppliers and contractors to collaborate at home and overseas. Backed by DTI and Scottish Enterprise, Subsea UK results from extensive consultation between industry and government on future issues.
Another example is the UK/Norway Cooperation work, set up on the basis that the UK would, medium-term, become a net energy importer and that Norway had a growing ability to export to the UK. The Cooperation workgroup identified a $2-billion prize that could be gained via closer cooperation on field developments, redevelopment of existing fields, operational synergies and decommissioning. Both governments have worked hard to maximize opportunities.
Initiatives that we developed for this year's Offshore Technology Conference (OTC) exemplify our involvement. For instance, we will run a series of seminars for international decision-makers during OTC, each focusing on a distinct area of UK capability.
To encourage investment in the UK, we will bring industry and government together at this year's OTC Active Arena, which focuses on North Sea operators. This event will allow decision-makers to update themselves on UKCS capabilities and opportunities. There will be an interactive dialogue between operators and UK industry players and government officials on such areas of interest as regulation, taxation and environmental protection.
These examples go beyond the day-to-day support that we provide. At OTC, we will help support about 200 British companies exhibiting at the show – the largest attendance by UK firms for some years.
Q: What are some major projects that UK companies are involved in?
A: In just about any international project around the world, you are likely to see UK involvement. The UK is a key location for E&P engineering design and project management. British companies actively contribute to many development successes, including Sakhalin in far eastern Russia and Bonga off West Africa.
In 2004, two major UKCS field developments will progress significantly, where UK-based industry is taking the lead – Clair Phase 1 and Buzzard, with combined expenditures of around £2.5 billion (US$4.6 billion). Clair is in the vanguard of projects transferring experience from the Gulf of Mexico, with British fabricators readily adapting to these new concepts. With the growing importance of subsea and deepwater E&P, UK firms are increasingly involved in such developments, managing them from here.
Q: As encouraged by DTI, what are some recent examples of British-created technology or capabilities?
A: New technology and innovative practice are vital to ongoing UKCS development and to the exporting of British know-how around the world.
DTI co-sponsors the annual Scottish Offshore Achievement Awards in Aberdeen, which showcase talent from companies of all sizes and sectors operating from Scotland. There isn't time to mention them all, but these included:
- A very different approach to pipeline integrity – advanced leak detection and sealing technology
- An automated, underwater vehicle development program that acquires data in ever-deeper waters
- A reeled, insulated pipe-in-pipe system with active heating to address flow assurance for ever-longer step-out developments
- Software that analyzes various riser types for floating production.
Q: Can you point to any notable E&P projects that utilize recent UK technological advancements?
A: There are quite a few, including the record-breaking tieback distances in the Penguins and Nuggets N4 developments. Also, unique challenges had to be overcome to develop the high-pressure/ high-temperature (HP/HT) fields at Elgin/ Franklin and Shearwater. Elgin/ Franklin and Shearwater were tremendous achievements in technology and scale. A current challenge is the tying back of the HP/HT Rhum field.
The development option chosen for Goldeneye field, successfully challenged conventional practice to bring gas condensate directly to shore for processing. There are, to a high degree, remotely operated facilities, made possible by enhanced data transfer systems, allowing unmanned platform support from shore. There are many more examples.
Q: Were you surprised that the invasion of Iraq did not have a greater effect on oil supplies and prices?
A: No. Improved dialogue between energy producers and consumers has increased consensus on the benefits of greater market stability. This was apparent in the run-up to the Iraqi conflict, when OPEC producers publicly committed to keeping the market adequately supplied. This made the market more confident that oil supplies would be sufficient. In addition, the International Energy Agency stood ready to coordinate a response by its members (for example, release of stocks), although this was not needed. Good progress has also been made in restoring Iraqi oil output to around 2 million bpd. 
Stephen Timms joined the Department of Trade and Industry in May 2002 as E-Commerce Minister. His title was expanded in June 2003 to Minister for Energy, E-Commerce and Postal Services. Previously, he was Minister of State for Schools at the Department for Education and Skills, from June 2001. Before that, he held several junior ministerial and other governmental positions. Mr. Timms was elected member of Parliament (MP) for East Ham in 1997, and was MP for Newham North East between 1994 and 1997. Before entering Parliament, he worked in the computing and telecommunications industry for 15 years, first for Logica and then for Ovum. He studied mathematics at Emmanuel College, Cambridge University.
|
