The UKCS Maximising Economic Recovery Review (the ‘UKCS MER Review’), published one year ago, outlined the substantial contribution the oil and gas industry makes to the UK’s energy security, economy and levels of employment, and highlighted the significant future potential of recoverable resources of the UKCS. But it also identified the serious challenges facing companies confronted with the task of realising this potential.
The UKCS, now one of the world’s most mature basins, has been finding it increasingly difficult to compete for international investment. Rising costs over many years, a fiscal regime that had not evolved with the fortunes of the basin, and the need for stronger regulatory direction, have complicated the challenges already faced by operators using ageing infrastructure and tackling more demanding fields.
The decline in global oil prices, which began in the middle of 2014, has only magnified the existing challenges for the UKCS as highlighted in Oil and Gas UK’s 2015 Activity Survey. A call to action is now needed to protect and sustain this critical UK industry.