turning commitment into action - oil & gas...

PROTECTIVE MARKING(as appropriate)

Turning commitment into actionOil and Gas UK Conference

17 June 2015


Turning commitment into action

Introduction

• Current context

• Building the OGA

• Focused delivery

• Culture & behaviours

• Future action


Jan 2011 June 2015

UKCS challenges

E&P decline Increased costs Sharp drop in price

Brent $/barrel

Economic challenges intensified since the Wood Review

All-time low for exploration

and appraisal

Existential crisis on costs,

efficiency and margins

Significant falls in

investment predicted

PROTECTIVE MARKING(as appropriate)Focusing on priorities

• Licence offshore oil & gas

• Licence onshore oil & gas

• Licence CCS

• Industry culture

• Commercial behaviour

• Greater collaboration

• Investment in UKCS

• Value creation

• Industry development

Role of the OGA in maximising economic recovery

Reg

ula

te

Infl

ue

nc

e

Pro

mo

te

Prize of additional 3-4 billion barrels Highly valuable industry

Sector strategies

Revitalise

exploration

Four priorities

Rapidly

implementTrusted advisor

to Treasury

Urgent action

from industry

Le

ad

ers

hip

, C

ultu

re

& b

eh

avio

ur

PROTECTIVE MARKING(as appropriate)Building the OGA

DECC

EDU

LED

Historically From 1 April c. Summer 2016

OGAExecutive Agency

(Civil Service)

DECC

OGA

Government

Company

DECC

Fra

me

wo

rk

Do

cu

me

nt

En

erg

y B

ill

20

15

Rapid progress on all fronts

Leg

isla

tio

n

Q3 ‘15 Mid ‘16Feb

Commission

Response

Executive

Agency

Leadership

complete

Critical mass to

deliver

Government

Company

Energy Act

1 April

Introduce

levy

MER UK

Consultation

Org

an

isati

on

Energy Bill & Levy Preparation

PROTECTIVE MARKING(as appropriate)MER UK Strategy

Delivering the maximum overall value from the

economic reserves in the UKCS

• Maximise net value not just volume

• Investment should add net value overall UK

• May oblige companies to redistribute value

• Companies to see satisfactory expected

commercial return on investment

• Balance extracting all economic reserves

and achieving MER across the UK

MER UK Definition

MER UK Principles

Combining new regulatory powers with a more proactive approach

Sanctions Rewards

Striking the right balance

PROTECTIVE MARKING(as appropriate)Rapid recruitment

Layer light structure with clear accountabilities – 179 max headcount

Chief Executive

Exploration &

Production

Policy,

Performance &

Economics

HR &

Change

Chief Financial

Officer

Technology, Supply

Chain &

Decommissioning

Licensing &

Legal

Exploration &

New Ventures

Central North

Sea

NNS & West of

Shetland

SNS &

Morecambe Bay

Angela Seeney Simon Toole Gunther Newcombe Hedvig Ljungerud Stuart Payne John Ogden

Andy Samuel

Brenda Wyllie Scott Robertson Eric Marston Nick Richardson

Aberdeen

London

A

L

A

A L LLA A

A A A A

PROTECTIVE MARKING(as appropriate)Experienced leadership

A strong and effective regulator


Urgent action underway to avoid domino effect

Protecting critical infrastructure

PROTECTIVE MARKING(as appropriate)Driving investment

£20m for new

geophysical surveys

Confirmation of new basin-

wide investment allowance

Petroleum revenue tax

reduced from 50% to 35%

Supplementary corporation tax

reduced from 30% to 20%

Urgent need for industry to reduce costs and improve efficiency

Principles:

• overall tax burden fall

• global competitiveness

• wider benefits / TVA

Forward work:

• Options to revitalise exploration

• Infrastructure, decom and PRT

Driving Investment Plan


Significant need for improvement

Asset stewardship

0% 20% 40% 60% 80% 100%

• Top 20 oil and gas producers

2014 performance and 2015 plans

• Constructive - high level of transparency

and growing cooperation

• Moving forward with far greater

transparency on data, performance and

improvement plans

• OGA now working with OGUK

benchmarking ahead of detailed sessions

with operators

Production efficiency performance Leaders engaged

PILOT

Target

PROTECTIVE MARKING(as appropriate)Revitalising exploration

21st Century Exploration Road Map

• PILOT Exploration Task Force initiative

• Potential new and neglected plays

• Well results, exploration success rates, yet-to-find estimates

Palaeozoic

study

• OGA/industry funded Palaeozoic evaluation

• Understand risk and improve stewardship

Post well

analyses

• Detailed analysis of c.100 wells

• Improve data access & quality of interpretation

Data and

technology

• Improved data management and access

• 3D seismic technology showcase

Integrated solutions required

28th Round licences

Other licences

Mid North

Sea High• 15,000 km of new regional 2D seismic lines

• Rockall Trough and Mid North Sea

• Preparation for a licence round next year

Root cause

analysis

Government

funded seismic

• Data, quality of interpretation, regulation

• Infrastructure, fiscal, capital, cost efficiency

Strategic

Licensing

Review

• Review of the UK licensing strategy

• Improve access to prospective acreage

• Adequate time to execute & firmer oversight

PROTECTIVE MARKING(as appropriate)Decommissioning

Who does what

DE

CC

OG

A

Area Teams

• Cessation of production

• Regional approach

• MER UK compliant

Decom Team

• Technology, costs, efficiencies

• Learning and cooperation

• Optimal models & plans

DECC Team

• Funding and security

• Programme approval

• Regulatory compliance

• Environment risk/mitigation

A huge prize - cost and efficiency is key

Efficiency opportunities

Management of asset late life: Pre-invest in decom readiness

Assets in the right hands: Alleviate obstacles to M&A

Early engagement: efficient execution of regulatory requirements

Industry cooperation: benefits from scale; joint campaigns eg SNS

Standardisation: equipment sharing, efficiencies & reduce risks

Share learnings: Companies, regulators & other basins

Technology: P&A, topsides removal, pipeline inspections

Supply chain: capacity planning, incentives, global export

PROTECTIVE MARKING(as appropriate)Create the right conditions

Creating a hub for capital investment by anchoring the supply chain

Create right

conditionsLeadershipBehaviours workshop with

Scottish Enterprise

Investment

OGA at Offshore

Technology Conference

Aberdeen City

Region Deal

Focus

Simplify landscape &

accountability

High impact priorities

Technology

OGA co-chair Technology

Leadership Board

Skills

University & college

partnerships

Infrastructure

Energy Technology

Institute

Transport and support

services


We all need to lead the change

Culture and behaviours

PROTECTIVE MARKING(as appropriate)OGA prioritisation

• 4 recommendations

• 6 strategies & 29 actions

• Legislation & governance

• 25 actions for OGA

• 7 industry expectations

• Highly visible

We all need to focus our efforts on the things that matter

• Urgent action

• Risks and opportunities

• Value at stake


Turning commitment into the right action

Looking ahead

• Complete Board recruitment

• Next wave of recruitment

• Finalise Energy Bill

• MER UK consultation

• Call to Action update Sept

• Introduce levy in Oct

• Move to new HQ Nov

Building the OGA OGA in action

• Opportunity matrix

• Driving investment plan

• Exploration priorities

• Seismic project

• Decom collaboration

• Wood Review & Call to Action

• Sector strategies

Industry in action

• Protect critical infrastructure

• Commercial behaviours

• Asset stewardship

• Cost and efficiency

• Decom efficiency

• Simplify landscape

• Retain and develop skills

turning commitment into action - oil & gas...

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