First oil

Last month, we recounted the sad tale of meager regulatory response in Texas. This month, in contrast, we provide you with details of how industry associations in Canada and the UK are being very proactive in trying to get their governments to address the crashed E&P market.

Canada’s offshore in crisis. On April 27, the Newfoundland & Labrador Oil & Gas Industries Association (Noia), along with the Newfoundland and Labrador (NL) government, hosted a virtual town hall to discuss the impact of the crashed market and hear possible solutions. In attendance were Noia CEO Charlene Johnson, provincial Minister of Natural Resources Siobhan Coady, and federal Minister of Natural Resources Seamus O’Regan.

A second virtual town hall on May 14 again featured Johnson, Coady and O’Regan, plus NL Premier Dwight Ball, and focused more closely on potential remedies. Describing the industry’s situation as being “death by a thousand cuts,” Johnson advocated for two proposals: 1) A multi-well exploration incentive program, with graduated reimbursement of capital cost, ranging from 30% to 70%; and 2) An Atlantic Investment Tax Credit, to help current, deferred and future projects. O’Regan said he would use the information presented at the town hall meetings to convince his cabinet colleagues that action is necessary.

On May 21, Ball sent a letter to federal Prime Minister Justin Trudeau, urging immediate, substantive assistance to East Canada’s industry. This was followed by a May 26 press conference featuring Ball, Coady, Johnson and leading industry players, where the group declared “a united front” to seek federal help. Notable at this event was Ball’s comment that “the import of foreign oil is not an option.” Finally, on June 3, Johnson sent another letter to Trudeau, pleading for a response from him to previous letters from Ball and the Atlantic Council of Premiers. As of June 5, Trudeau had yet to officially respond.

Concerns over UKCS future. The UK upstream association, Oil and Gas UK (OGUK), has tried diligently to bring relief and assistance to companies and workers. Indeed, OGUK fought to have the industry remain covered under the UK government’s “furlough scheme,” which pays 80% of the salaries of furloughed workers, up to £2,500/month. On May 12, the program was extended until Oct. 31. But, many industry companies may still wind up laying off workers after Oct. 31, so should they do it now, rather than later?

Meanwhile, OGUK has convened “a group of experts” to help shape the E&P industry’s recovery, looking at opportunities from exploration to decommissioning. Also, during May, OGUK released a study that it commissioned from University of Aberdeen Professor Alex Kemp (a World Oil editorial advisor). That study shows significant negative consequences for future UKCS development and production, as well as a potential loss of 30,000 jobs. We will have an article with Professor Kemp’s findings in our July issue.

New editorial/advisory additions. We are pleased to welcome two editorial-related additions. Joining as a contributing editor is Willard (Bill) Capdevielle, who will focus primarily on writing the monthly “What’s New in Production” column. Bill has a rich E&P background of more than 40 years, having held various technical and managerial positions.

And joining our Editorial Advisory Board is Nola Zwarich, who is Principal Completion Engineer at ConocoPhillips Alaska. Nola takes over the seat held previously by Keith Lynch, who retired from ConocoPhillips as Well Operations Advisor—Unconventional Assets, earlier this year. We salute Keith for roughly 10 years of service as an editorial advisor. Nola has over 20 years of experience at ConocoPhillips in drilling and completion engineering positions worldwide. Currently, she leads the completion design for a new major project and discovery in Alaska.

About the Authors

Kurt Abraham

World Oil

Kurt Abraham kurt.abraham@worldoil.com