The UK North Sea industry does have a sustainable future, if action is taken now to make the changes needed to deliver $15 dollar production costs, industry experts insisted today.
Gunther Newcombe, E&P director at the Oil and Gas Authority, told an audience at the inaugural Topsides UK conference at Aberdeen’s Exhibition and Conference Centre, that driving the “transformational change” in industry behaviour must happen fast to ensure the future of the UK oil and gas sector.
He said costs in the UK sector are three times those in the Norwegian sector. He praised the efforts of operators and supply chain companies, who were working alongside the authority and Government to create a sustainable future, but insisted action must be taken now.
“Any change needs to be sustainable. The good news is there is still a lot going on in the North Sea and there are still 10 billion barrels still to be found.
“The bad news is that in the UKCS costs of delivery are on average 30% off target and some projects are 200% off target.
“If you compare ourselves with Norway, they are 10% out on budget and 10% out of schedule on average.”
“The transformational agenda is absolutely critical. We have to change now.
“What we are seeing on the costs side, is a classic, ‘let’s take people out, let’s do no training, let’s get rid of consultants’. That makes a difference but it doesn’t transform things because in the past the oil price has come back in and it’s business as usual.
“I think now is the real critical time, if we want to transform this business so that it is sustainable and isn’t just linked to oil price. We have to change the way we work and tackle things in a different way.
“We need to change as an industry and the OGA is here to help that.”
Walter Thain, managing director of Petrofac’s engineering and production services, said new entrants into the North Sea – such as Ineos – showed there were investors who continue to believe in a sustainable future.
He said: “For me, when assets change hands, it’s a great measure of sustainability.
“When people buy these assets, they buy to invest in them, they don’t buy them to decommission.”
Craig Shanaghey, late life decommissioning operations director at Amec Foster Wheeler, said: “There is no silver bullet to collaboration. We need more trust in the supply chain. We’ve taken cost base down by 25% but in order to make it sustainable we need to see 30-60% savings.
“It the transformational change in doing things that will get us that. If we don’t achieve that what’s to prevent us going back to the way things were done when the oil price comes back?”
The two-day Topsides UK conference, sponsored by Petrofac, is the first of its kind in the UKCS and Europe focusing on operating topsides facilities more efficiently through enhanced production, increased productivity and lowered operating spend.