Government support arrangements require a “major reorganisation” if the UK is to improve the production efficiency of its offshore oil and gas extraction, according to a review authored by Sir Ian Wood.
Sir Ian Wood’s report, commissioned by the Government, recommends a commitment from the government and the oil and gas industry to a “new shared strategy for maximising economic recovery”, along with a new external regulatory body to oversee and develop a programme of change and growth. The report also urged an investment in prolonging the life of existing infrastructure to process oil and gas resources.
Currently, the UK relies on production from the North Sea for around 50% of its current oil and gas appetite. With the UK’s reliance on gas as a primary energy source firmly expected to rise to 70% by 2030, a focus on improving this output is much needed.
The Government has accepted and fast-tracked all of the main recommendations of the review and claims that these changes will enable the industry to recover between 3 to 4 billion more barrels of oil and gas than otherwise possible over 20 years.
Sir Ian Wood, a retired businessman previously of oil services firm Wood Group, has previously warned the oil industry of a “nightmare legacy scenario” of “here today, gone tomorrow and worse off.” He believes that this review is a “watershed opportunity” which would add at least £200bn to the economy over the next 20 years.
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