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LONDON (Alliance News) - Trade organisation Oil and Gas UK has introduced collaborative measures to try and improve the situation for the UK offshore oil and gas industry to try to increase the life of older fields and improve communication between operators to minimise downtime.
The organisation is a representative body of the UK offshore oil and gas industry, mainly focused on the UK North Sea and UK Continental Shelf, with over 500 members including major oil and gas players.
On Wednesday, Oil and Gas UK outlined the progress it has made in tackling challenges in the UK offshore industry including rising costs, low oil prices and a plateau in production after most of the oil and gas fields in the North Sea became more expensive to maintain due to there age.
In 2014, UK petroleum production fell 2.3% year on year to 43.5 million tonnes of oil equivalent from 44.5 million tonnes in 2013. UK petroleum production has continuously fallen for years, falling from 69.0 million tonnes in 2010 as the North Sea sees investments dwindle.
The sharp slide in oil prices has not helped, falling to about USD65 a barrel from over USD115 a barrel last June, putting pressure on the North Sea operators and threatening important production from the area.
Companies such as FTSE 100-listed oil majors BP PLC and Royal Dutch Shell PLC have already reduced investment and cut jobs in the North Sea, with drilling service company Archer slashing 400 jobs earlier this year alongside press speculation that international firms like ConocoPhilips are mulling the potential sale of assets in the region.
The UK government has attempted to quell reduced investment and issues in the North Sea by pledging four measures that would offer GBP1.3 billion of support to the UK oil and gas industry, primarily in the UK North Sea which would lead to production being boosted by 15% before the end of 2020.
On Wednesday, Oil and Gas UK Operations Director Oonagh Werngren said: "Although tough decisions on resources and projects are having to be taken by individual companies, there is also now a concerted effort to work together to tackle the fundamental behaviours that have driven cost escalation on the UK Continental Shelf."
"The goal is to achieve a more internationally competitive oil and gas province and attract the fresh investment needed to unlock the North Sea?s remaining potential. Achieving this will require a 40% reduction in the industry?s cost base," she added.
The organisation said consultancy firm Mercer has been commissioned to carry out a survey of daily rates paid to independent contractors to enable companies to benchmark their rates against the market. The first rates will be available to companies from July.
It has also committed a work-group to collate a collection of "good practice" to create a "best practice in delivering planned shutdowns" for publication this summer.
A database of spare parts held in inventories across the sector has also been established to allow companies to source replacement equipment quicker with the aim of reducing production downtime. Nine oil and gas operators have already logged their inventories of spare parts and the organisation said "examples of success are already emerging" after a pump exchange between two operators allowed a 13-wekk delay in production to be avoided.
Oil and Gas UK and Decom North Sea have also appointed Arup to identify the barriers that currently prevent the industry from implementing new technology to manage late-life assets to extend production.
"Our vision for 2020 is an industry actively exploring and maximising recovery of the UK?s oil and gas, a supply chain providing a strong engine for growth with lifting costs less than $20 per barrel. The sector now has to deliver the bold action and behavioural change needed to make the vision a reality. Everyone has a part to play," said Werngren.
Oil and Gas UK is just one of numerous organisations trying to address the issues in the UK North Sea alongside the UK government and the Oil and Gas Authority.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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