Britain said it would create a new oil and gas regulator which will help UK explorers speed up their search for hard-to-access fossil fuel resources in a bid to counter plunging North Sea production rates.
A government-commissioned report published on Monday said Britain could lose out on a potential 200 billion pounds ($335 billion) worth of oil and gas output if measures proposed in the report are not followed.
Two thirds reduction in production
The country’s oil and gas output has fallen around two thirds since its peak at the turn of the century, but up to 24 billion barrels of oil equivalent (boe) are expected to still come out of the ground.
Oil and gas companies active in the UK’s Continental Shelf are expected to meet most of the costs of a new oil and gas regulator that will speed up licensing processes, help coordinate exploration data and enforce rules to maximise well output.
30 million pounds a year
Running a new regulator is estimated to cost 20-30 million pounds a year, a small amount compared to revenues oil and gas explorers make from selling fossil fuel.
The government’s decision to create a dedicated regulator follows a recommendation in the oil and gas sector’s first review since the mid-1990s, also known as the Wood Review.
The North Sea is thought to contain billions of barrels of hard-to-reach oil but with many platforms and pipelines coming to the end of their working lives, time is fast running out to get at them. The review’s task was outlining how to make that easier.
These are matters for the whole industry
Big players in the oil and gas industry, such as BP, Statoil or Shell, welcomed the creation of a new regulator.
Industry and government are still discussing the exact split up of the costs to run the body, with a decision expected by the summer, a government spokeswoman said.
“These are matters for the whole industry and we will be working with other operators, the government and the regulator to look closely at the details and practical implementation of today’s report,” said a spokesman for Shell.
Industry experts say the cost to companies is dwarfed by the benefits a smooth-running regulator would offer.
“I believe industry will have to pay, but in return should be granted appropriate service level agreements,” said Sir Ian Wood, author of the review and former chairman of oil services company Wood Group, without providing figures.