the oil and gas activities of the energy development unit · pdf filecontents an introduction...

The Oil and Gas activities of the Energy Development Unit

Contents

An Introduction to the Oil and Gas activities of the ..................................................... 1Energy Development Unit

Offshore Environment and Decommissioning Unit...................................................... 2

Consideration of the Environment................................................................................. 3

Decommissioning............................................................................................................ 3

Licensing and Regulating the Explorers and Developers............................................ 4

Maximising UKCS Production

PILOT........................................................................................................................ 5/6

WestofShetland......................................................................................................... 7

ThePetroleumMeasurementandAllocationTeam......................................................8

TheFieldTeams...............................................................................................................9

StewardshipandEnhancedOilRecovery,HeavyOil...................................................10

ProductionEfficiency-MakingitWork........................................................................11

LicensingandFallow.....................................................................................................12

Maximising the Economic Benefits

OilandGasIndustryandSupplyChainDevelopment.................................................13

PILOTShareFair............................................................................................................14

PILOTForwardWorkplan..............................................................................................14

ProjectPathfinder..........................................................................................................15

UK/NorwayCooperation................................................................................................16

WorkingwiththeUKSupplyChain–FabricationSector............................................17

CommercialCodeofPractice.......................................................................................18

InfrastructureCodeofPractice....................................................................................18

ImprovedAccesstoInfrastructure...............................................................................18

Investing in the Future

Technology......................................................................................................................19

DeliveringanIndustrialStrategyforOilandGas...................................................20/21

ReviewofUKOilandGasRecovery..............................................................................22

Reference

Contacts...........................................................................................................backcover

1

An Introduction to the Oil and Gas activities of the Energy Development Unit (EDU)

OneofDECC’skeygoalsinsupportoftheGovernment’sgrowthagendaistomaximisethevalueofourindigenousoilandgasreservesonourwaytoalow-carbonfuture.

DECC’sEnergyDevelopmentUnit(EDU)isresponsibleformanagingtheUK’sonshoreandoffshoreoilandgasreserves.Wedothisthroughlicensingacreagetooperators,encouraging exploration and sanctioning development plans for exploiting reserves.Wearealso responsible, throughaseparate team, for theenvironmental regulationofoffshoreoilandgasactivityontheUKCS,whereweworkcloselywiththeHSEandtheMaritimeandCoastguardAgencytoensuresafeandcleanoperationsintheseasaround our shores. We oversee the decommissioning of offshore installations andpipelines and ensure that operators have in place the necessary financial security.WeregulateoffshoregasunloadingandstorageandoffshorecarbondioxidestorageactivitiesinsupportofCarbonCaptureandStorage.Finallyandcrucially,weensurethatouroilandgasreservesmaximiseUKgrowthbyprovidingsupport for theUK’soilandgassupplychainthroughthePILOTforum.TheOfficeofUnconventionalGasandOil,recentlyestablishedwithinEDUisworkingacrossGovernmenttocreatetherightconditionsforoperatorstobeabletoexploretheUK’sunconventionallandwardresourcesofgasandoil.

Thisbookletprovidesabriefoverviewofallofouractivitiesintheseareas.Besidesthiswork,EDUisalsoresponsibleformanagingplanningdecisionsformajorelectricityandgasinfrastructureprojects,advisingonplanningpolicy,themanagementofthehealth,pensionandotherliabilitiesoftheformernationalisedcoalindustryandoversightoftheCoalAuthority.

Our aim is to maximise the economic production of the UK’s offshore oil and gasresources taking full account of environmental, social and economic objectives. WepromotetheoilandgasindustrythroughouttheentirelifecycleofprojectsensuringthebestvaluetoUKplcincludingthecontinueddevelopmentofanefficientUKbasedsupplychainthroughtheSupplyChainCodeofPractice.

While we recognise that the UKCS is maturing the North Sea still offers significantinvestmentandgrowthopportunities.Successwill,howeverrequireinnovativethinkingand technology. It is important to have the right business climate and regulation inplacetoachieveourgoalofmaximisingeconomicrecoveryandthisiswhytheSecretaryofState,RtHonEdwardDaveyMPannouncedacomprehensivereviewofUKoffshoreOilandGasproductionandappointedSirIanWoodtoleadthiswork.SirIan’sreportisexpectedearlyin2014.

Stephen SpeedHeadofEnergyDevelopmentUnit

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Offshore Oil and Gas Environment and Decommissioning Unit (OGED)

OGEDisresponsibleforoffshoreenvironmentalpolicyissuesrelatingtooffshoreoilandgasexplorationandproduction,offshoregasunloadingandstorageandoffshorecarbondioxidestorageactivities.Thisinvolves:-

• StrategicenvironmentalassessmentofUKcontinentalshelfpriortolicensing;

• Environmentalregulation,includingenvironmentalassessments,approvalsandenforcement;

• Environmentalemergencyresponseplanapprovals;

• Oilspillsurveillanceandpollutionprevention;

• Legalobligationsandfinancialsecurityfordecommissioningofoffshoreinstallationsandpipelines;and

• Approvalandmonitoringofdecommissioningprogrammes.

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Consideration of the Environment

TheOffshoreEnvironmentUnitconsistsofthreeteams,theEnvironmentalPolicyTeam,theEnvironmentalManagementTeam,and theOffshoreEnvironmental InspectorateTeam. The Unit is responsible for regulating the economic exploitation of offshoreenergyresourcestotakefullaccountofenvironmentalandsocialobjectivesby:

• Consultingwith internationalbodies (e.g. theEUandOSPAR),otherGovernmentDepartments(e.g.Defraandthedevolvedadministrations)andstakeholdersonthedevelopmentofpolicyandregulatoryinitiatives;

• Implementingdomesticlegislation,internationalagreementsandagreedcodesofpracticetoensurethatoffshoreoilandgas,gasstorageandfutureCCSprojectsdonothaveasignificantadverseimpactontheenvironmentorotherusersofthesea;

• Maintaininganappropriateandup-to-dateunderstandingoftheimpactofoffshoreoilandgas,gasstorageandCCSdevelopments,andensuringthatthisisreflectedintheimpactassessmentprocessandenvironmentalmonitoringprogrammes;

• Inspectingoffshoreinstallationstoensureregulatorycompliance;• Providingaresponsetooffshoreenvironmentalincidents;and• Investigatingandenforcingwherethereisevidenceofregulatorynon-compliancein

linewiththeDepartment’sEnforcementPolicy.

www.gov.uk/government/policies/providing-regulation-and-licensing-of-energy-industries-and-infrastructure/supporting-pages/environmental-regulation-of-offshore-oil-gas-and-carbon-dioxide-storage-activities

Decommissioning

TheOffshoreDecommissioningUnit(ODU)ensuresthatUKCSoilandgasdecommissioningiseffectiveandresponsible,takingfullaccountofsafety,environmental,economicandsocietalimpactsandinternationalrequirements.ODUdoesthisby:

• Ensuringthatdecommissioningliabilitiesareplacedontherightcompanies;• Monitoring and assessing companies’ ability to meet their decommissioning

financial obligations. Where appropriate, covering the risk of default by, seekingfinancial security from operators to protect the Government and taxpayer fromhavingtocoverdecommissioningobligations;

• Examiningandconsultingondraftdecommissioningprogrammes;• Makingsureapprovedprogrammesareimplemented;• RepresentingtheUK’sdecommissioninginterestsatOSPAR;and• Developingdecommissioningpolicyandproceduresinconsultationwith

stakeholders.

www.gov.uk/oil-and-gas-decommissioning-of-offshore-installations-and-pipelines

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Licensing and Regulating the Explorers and Developers

The Licensing, Exploration and Development Team:

• Maintainanddeveloptheregulatoryframework,takingfullaccountofexistingandpotentialEUlegislation,machineryofGovernmentchanges.

• Managethelicensingregime,consentsforwells,fielddevelopmentplans,etc.• Promotesoundcommercialbehavioursandefficientuseofinfrastructure,

informationandTechnology.• Workwithindividualcompaniestomaximisethevalueoffieldsandprospects.• Workwiththeindustryonupstreamemergencyplans.• UsePILOTtoprovidestrategicdirection.• Provideinputtolongertermplansforgasstorageandcarboncaptureandmedian

lineactivity.

www.gov.uk/oil-and-gas-fields-and-field-development

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PILOT

PILOT-theoilandGastaskforceisauniquepartnershipbetweentheUKOilandGasIndustryandGovernmentworkingincooperationtodeliverquicker,smarterandsustainableenergysolutionstosecurethelongtermfutureoftheUKCS.

VisionMaximising the recovery of the UK’s remaining oil and gas reserves is vital to thecontinuedenergysecurityandprosperityof thiscountry. It isestimated that theUKcontinentalshelfcouldstillofferupto20billionbarrelsormoreofoilandgas.PILOT,throughIndustryandgovernmentengagementadvancesinitiativesdirectedatreducingcost,eliminatingbarriersandmaximisingtheeffectivenessofresourcestobringaboutthefuturewhichcouldstillseetheindustrymeetinghalfthecountry’soilandgasneedsin2020.

SecretariatWorkstoensurethesuccessofinitiativesdrivenfromPILOT,whichaimtomaximiserecovery of the nation’s indigenous hydrocarbon reserves, and also improvecompetitiveness in the Supply Chain. The scope of work incorporates promotion oftheUKsupplychaincapabilityandfacilitatingthedevelopmentofnewandemergingtechnology from concept to deployment. Additionally the unit has responsibility forensuringthesectorhasanadequatelyskilledworkforce.

TocontactthePILOTSecretariatpleaseemail: [email protected]

Why it works

• Thereisacommongoaltomaximiserecoveryofourindigenoushydrocarbonreserves.

• Allstakeholdersareengagedintheforum.• Allmembershavepassionandcommitmentfortheprocess.• PILOTMembershipisvaluedbycompanies.• Specifictargetsandrelevantworkareasensuretargetfocussedmeetings.• Commitmenttodriveforwardinitiativesforthegreatergoodofthebasin.• SecretaryofStateandMinisterialcommitmenttotheprocess.

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PILOT Future Challenges:

• ProductionEfficiency–Tofindwaysofimprovingproductionofoilandgasresourcesefficientlywhichwillensurethatrevenuesaremaximisedandfutureincrementalinvestmentsareenabled.

• ImprovingRecovery-ToidentifythemosteffectivewaystoincreaserecoveryfactorsandtofindmechanismstoimprovecosteffectivenessincludingtheapplicationofEORtechnologies.

• Exploration–Lookingatwaystode-riskexplorationandincreasesuccessrates.

• Technology – To develop an overarching strategy for the basin and identify keytechnologygaps.

• Infrastructure – To identify critical infrastructure and consider mechanisms tomaintainanddevelopittomeetourfutureneeds.

• Supply Chain Development - Maintaining Competitiveness of the basin andresponsivenessofthesupplychain.

• Stimulating Investment – looking at Access to Capital issues and over-commercialisation. Ensuring we are on a trajectory to achieve the best overalloutcomefromthebasin.

These objectives have been confirmed by Secretary of State, Energy and ClimateChange,EdwardDavey.

www.gov.uk/government/policy-advisory- groups/105#contact-details

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West of Shetland TheareatothewestoftheShetlandIslandsandtheHebridesisthelargestremainingareaofsignificantprospectivityontheUKCSandrepresentspotentially15-17%oftheUK’sremainingoilandgasreserves.

The development of new gas transportation infrastructure and the use of existinginfrastructureisthekeytounlockingthispotential.TotalE&PUKLtd,theirpartnerintheLagganandTormorefields,DONGEnergy,andotherpartnersintheRosebankfieldarecurrentlyconstructinganewgaspipeline(“SIRGE”)thatwilllinktheShetlandIslandswithStFergusviatheexistingFriggpipeline.Gastransportationwas,andisseenasthekeytothewiderdevelopmentofthearea.TheSIRGEsystemwilldelivergastothemarketby2014.

TheLagganandTormorefieldsarebeingdevelopedsubseawithproductiontied-backviaanewpipelinesystemtoanewgasprocessingterminalownedbyTotalandDONGatSullomVoeontheShetlandIslands.

AfurthergasexportpipelineistobebuiltaspartoftheChevronoperatedRosebankoilfielddevelopment, andwill connect into theSIRGEsystem.Sparecapacity is likely tobecomeavailableinthefutureasRosebankproductiondeclines.

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The Petroleum Measurement and Allocation Team

In 2011/12, the Treasury received £6.53bn in direct revenue from taxes on UK oil andgasproduction.SincethetaxationregimeisnotuniformacrosstheUKCS,allocationofrevenuetoindividualfieldsisofdirectfiscalsignificance.

ThePetroleumMeasurement&AllocationTeamisresponsiblefor:

• DevelopingtheUKregulatoryregimeforthemeasurementofoil&gasontheUKcontinentalshelf;

• Inspectingoffshoreandonshoreinstallationstoensurecompliancewith‘goodoilfieldpractice’asdescribedinDECC’sMeasurementGuidelines;

www.gov.uk/oil-and-gas-measurement-of-petroleum

• ReviewingLicensee’sproposalstoensurethatallnewfielddevelopments (or modifications to existing developments) conform to an agreed Method of

Measurement(PON6);

• Liaising with overseas Governments on areas of common interest (e.g. theMemorandumofUnderstanding(MoU)withtheGovernmentofNorway,whichcoversjointsupervisoryactivities);

• ProvidingmeasurementadvicewithinDECCandwithotherGovernmentDepartments(e.g.HMRC,NMO).

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The Field Teams

Thereare3fieldteams:

• SouthernNorthSea&EastIrishSea• CentralNorthSea• NorthernNorthSeaandWestofShetland

The field teams work to ensure that, oncediscovered, potentially economic oil and gasfields are brought quickly into developmentand their value maximised. The teams playakey role in theapprovalof licensee’sFieldDevelopment Plans (FDPs) and applicationsforConsenttodrillwells.

FollowingFDPapproval,theteamalsoworktoidentifyhurdlestoincrementalactivityandtoensurethattheeconomiclifeofmaturefieldsis maximised and that gas is not wastefullyflared.

The teams also have a key role ensuring undeveloped discoveries are not allowed tobecomefallow,identifyinghurdlestobeneficialactivityandresolvingthese.

ThefieldteamsalsoconductanannualreviewoftheUK’soilandgasreserves,andproduceshorttermandlongtermproductionforecastsonaregularbasis.

www.gov.uk/oil-and-gas-uk-field-data

For the latest digital UKCS map please see below link – this is updated on a monthly basis

www.gov.uk/government/uploads/system/uploads/attachment_data/file/210689/Infrast_Off.pdf

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Stewardship and Enhanced Oil Recovery

DECCrecognisestheimportanceofmaximisingpotentialfromexistingbrownfields.TheStewardshipprocesshasestablishedaclosedialoguebetweenGovernmentandIndustrytolookatindividualproducingassetsandhasresultedinincreaseddevelopmentdrilling.Itisimportanttobuildonthisexperienceandfocusonexplorationtargetsandimprovedfieldreliability.

• Stewardship has been successful in raising awareness of the benefits of criticallyanalysing thepotential of each individualproducingasset. There is clearevidencefrom within the basin that some assets can perform substantially better with theapplicationofincreasedinvestmentandfocus.

• StafffromDECCusetheStewardshipprocesstoengagewithanumberofOperatorsontheproductionefficiencyoftheirassets.

• SeveralNorthSeaOperatorsareconsideringCO2 injectionEORopportunities,buthighlightthecurrentabsenceofoffshoreCO2supplyandtheneedforcollaborationoninfrastructuretoachievethis.TheadoptionofCarbonCaptureandStoragecouldalsocreateopportunitiesforCO2EOR.

• There is growing interest in chemical EOR, particularly polymer injection and lowsalinitywaterflood.BPhavecommittedtousinglowsalinitywaterfloodinthesecondphaseofthedevelopmentoftheClairoilfieldWestofShetland,thefirstprojectofthistypetobeinitiatedoffshoreanywhereintheworld.ApprovalofthisprojectwasannouncedbythePMinAberdeeninOctober2011.AndChevronarecarryingoutapolymerinjectionpilotprojectintheirCaptainfield,onlythesecondoffshoreprojectofthistypeanywhereintheworldandseveralprojectsareexpectedtoreachsanctionoverthenextfewyears.

Heavy Oil

TheUKhasseveralbillionbarrelsof“heavyoil”(oilwithahigherthanusualdensityandviscosity)thatisasyetundeveloped.Withtherecenthighoilpricesandfiscalincentives(e.g.the“UltraHeavyOilFieldAllowance”announcedin2009),thereisgrowinginterestinbringingforwardthesetechnicallychallengingdevelopmentprojects, inparticular4projectsinquadrant9oftheNorthernNorthSea.AFieldDevelopmentPlanforStatoil’sMarinerheavyoilfieldwasapproved inearly2013.Fielddevelopmentplans for threeotherheavyoilfieldsinthesamearea(Statoil’sBressayfield,Enquest’sKrakenandXciteEnergy’sBentley)areexpectedtobesubmittedin2013.Together,theseprojectscouldaddupto1billionboetotheUK’sprovenreserves.

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Production Efficiency - Making it Work

Onceafield isdeveloped, it is intheinterest of all stakeholders that itsoil and gas resources are producedefficiently - by minimising downtimeandmaximisingflowrates.

Production Efficiency (PE) is themetric used by the Department toassess the efficiency of all UKCSproductionoperationson a commonbasis. This metric is a simple ratiowhich compares actual productionagainstthemaximumproductionpotentialofasystem,constrainedonlybytechnicalandmarketlimits.Dependingonfactorssuchasthecomplexityofaproducingsystem,aPEintherangeof80%to95%isconsideredtorepresent“good”performance.

ItisofconcernthatPEacrosstheUKCShasdeclinedfrom80%toaround60%,andthatthisdeteriorationhasbeenparticularlypronouncedoverthepast2-3years.ItisestimatedthatthereductioninPEvis-a-vispreviouslyattainedlevelscurrentlyaccountsforalmost0.5millionboe/doflostproduction,approximatelyonethirdofactualproduction.

Inresponsetothissituation,aUKCSPEtargetof80%by2016wassetbytheDepartmentandleadingOperatorsatthePILOTforuminMay2013.Tosupportdeliveryofthistarget,a Production Efficiency Task Force (PETF) has been established to share insights onroot-causes,considergoodpractice,andpromotecollaborativeapproaches.ProductionEfficiencyimprovementthemeswillbeidentifiedtofocustheworkofthePETF.IndividualOperatorshavecommittedtoprepareasset-specificimprovementtargetsandplans,andmakebudgetaryprovisionsforimplementation.

Overallprogressand,wherenecessary, further interventionswillbeconsideredat thebi-annualPILOTforum.

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Licensing and Fallow

Government iscommittedtomaximisingtheUK’soilandgasresourcesandwants toworkwiththeindustrytorealiseeconomicpotential.DECC’slicensingstrategyisaimedtoattractthenecessaryexplorationandinvestmentinUKCS.Licensing has continued to ensure that momentum is maintained and the North Seacontinuestoattractglobal investment. In2012,themostrecent(27th)offshoreroundreceivedthehighestnumberofapplications(244)sincelicensingbeganin1964.Afirsttrancheof167licenceawardsweremadelastAutumn.DECCintendstolaunchanewoffshoreroundin2014.

TheFallowprocesscontinuestodeliverresultsintermsofnumbersofwellsdrilledanddiscoveriesdeveloped,howeverasaresultofthesuccessoftheprocesstherearenowfewerFallowassetsremaining.

Inviewofthetimeandeffortinvolvedinthe27thRound,theFallowreviewsin2012werelimitedinscope.Thefullfallowreviewprocesswillbereinstatedfor2013tomaintainthepressureforactivityorrelinquishmentpriortotheproposed28thRound.

www.gov.uk/oil-and-gas-fallow-blocks-and-discoveries

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Oil and Gas Industry and Supply Chain Development

The Industry Development team supports the Supply Chain serving the Oil and GasIndustryintheUKandabroadbyencouraginggrowthandimprovingprosperitythroughgreatercompetitiveness.Wedothisbyencouraging:• Progressivebusinesspractices• TheUK‘scontributiontodevelopments• Strategicandinnovativetechnologydevelopments• InternationalisationofUKSupplyChaincompanies• Skillsdevelopment

The team also works to ensure the success of initiatives and work areas from PILOTwhichaimstomaximiserecoveryofthenation’sindigenoushydrocarbonreserves.

Wemaintainon-goingengagementwiththeSupplyChainthroughourrelationshipswithrepresentativeorganisationsatbothaSectoralandRegionallevel.TheaimistoensureafullyrepresentativeviewispresentedtoGovernmentthroughTradeAssociationmeetings.Membersinclude:

• Oil&GasUK• SubseaUKandSubseaNE• OffshoreContractorsAssociation• EastofEnglandEnergyGroup• NOFEnergy• EnergyNorth• DecomNorthSea• EnergyIndustriesCouncil

WeworktopromotetheSupplyChainCodeofPractice,whichaskscompaniestoagreetoadoptandimplementbestpracticeguidelinesfortheUKCS,aimingtoimprovethewaybusinessisconducted.Thecodeaimsto;improveperformance,eliminateunnecessarycosts,andaddvalueandboostcompetitiveness.Thecodewasre-launchedinJanuarywithimportantchangesmadetothecriteriaofcompliancetoencouragebetterapplicationofthecodeacrosstheSupplyChain.Thesignatoriesworktowardsfullcomplianceandcompriseofmajorpurchasers(OperatorsandprincipalContractors)andsuppliers.

WearecurrentlyworkingalongsideDecomNorthSeatodeveloptheDecommissioningSupplyChain,toensureitisabletotakeadvantageofthefuturepotentialopportunitieswhichwillarise.

WealsoworkwithUKOperatorstomaximiseopportunitiesandvaluecreationfortheUKSupplyChainandhaveanon-goingdialoguewithIndustrytounderstandthechangingmarket.Tothisendwehavedevelopedaninitiative-ProjectPathfindertoshowcurrentandfuturedevelopmentsintheUKCSandprovideinformationtotheSupplyChain.

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PILOTforward workplan

Bronze Silver Gold


PILOT Share Fair

The PILOT Share Fair is the annual flagship event for the Supply Chain. The event isorganisedbyOil&GasUKandheldeachNovember.ThePILOTShareFairiscentraltotheSupplyChainandcontinuestogrowwitharecordbreaking1000+delegatesattendinglastyear.

ThePILOTShareFairprovidesthelatestUKoilandgasbusinessopportunitieswheremajoroilandgasplayersunveiltheir18monthsforwardplansforprojectsintheNorthSea.

Thiseventprovidesdelegateswiththeopportunityto:

• LearnhowtodobusinesswithcompaniesactiveintheUKCS• Findoutkeypointsofcontact• Takepartinone-to-onediscussionswithpotentialclients• Networkwithhundredsofindustrycolleagues• SupportandlearnmoreabouttheSupplyChainCodeofPractice

FormoreinformationpleaseseetheOil&GasUK:PILOTShareFairwebpage

www.oilandgasuk.co.uk/PILOT_Share_Fair_2012.cfm

PILOT Forward Workplan

DECC,inpartnershipwithFPALandOil&GasUKcreatedthePILOTForwardWorkplan, to provide current on-line information highlighting potential contracts andbusinessopportunities to theSupplyChain.ThePILOTForwardWorkplannowcoversdetailsfromaround30keyUKCSContractorsandOperators.ThedatabaseishostedontheFPALwebsite.

www.achilles.com/en/find-your-achilles-community?id=409

Theinitiativeispartofthe‘tieredcompliancesystem’fortheSupplyChainCodeofPractice,andiscriteriaforachieving‘Gold’status.

www.oilandgasuk.co.uk/knowledgecentre/ SupplyChainCodeofPractice.cfm

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Project Pathfinder - providing the Supply Chain with visibility of future projects

ProjectPathfinderisaninitiativesetuptoassisttheSupplyChainpinpointandtargetemergingdevelopments.Itprovidesareal-timelookattheoilandgasprojectsforbothnewfielddevelopmentsanddecommissioningofredundantfacilitiesintheUKCSoverthenext few years.Currently thereareover50 liveprojectsand themedium term isexceptionallybuoyant.

DECClistenedtotheSupplyChainandconcludedthatearly informationonemergingprojects would be helpful to enable them to plan ahead. Project Pathfinder provideshighleveldetailsofthedevelopmentandtimingsoftheopportunitiesaswellascontactdetailswithinthecompanies.Ithasbeendevelopedtoprovideincreasedvisibilitytothecontractingcommunityandtobuildonthe informationavailablefromexistingforumssuchasthePILOTShareFairandthePILOTForwardWorkplan.

Industryactivelysupports this initiativeandnowdirectlyupdates informationon theirprojectsviatheDECCOilandGasPortal,providingamoreresponsiveservice.

ThisworkhasalsobeenendorsedbyinfluentialindustrybodiesincludingOilandGasUK,andisregularlyvisitedbyawidespectrumofSupplyChaincompanies.

ClickonthebelowlinktoviewProjectPathfinder

www.gov.uk/oil-and-gas-project-pathfinder

ProjectPathfinder


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UK/Norway Cooperation

TheUKandNorwayshareacommon interest inmaximising thebenefit tobegainedfrom all aspects of the North Sea. For many years we have been working closelywith our Norwegian counterparts, sharing experience and knowledge on oil and gasdevelopment.Wesharecommonconcernsaboutsafetyandtheenvironmentandensureourenvironmentalandregulatoryregimesremainexemplarsfortheinternationalforum.

Theclosecooperationhascreatedthenecessaryguidelinestodeveloptrans-boundaryfieldsandpipelines.TheFrameworkagreementshaveresultedinasignificantnumberofnewcross-borderfieldsbeingdevelopedandhasfacilitatednewpipelineconnections.

Notablebenefitsfromtheco-operationinclude:

• JointFrameworkTreatyinplace.• Newguidanceontrans-boundarydevelopmentpublishedjointlybybothGovernments

toclarifyregulatoryrequirements,simplifytheapprovalprocessandtoexpeditenewprojects.

• NewNorwegiangassuppliesdeliveredtotheUK,withtheLangeledpipelinelandinggas from Ormen Lange at Easington and the Tampen link and Gjoa pipelines,connectingtheNorwegianTampenareatoStFergusviatheFLAGSpipeline.

• UK/Norway Cross-border Business to Business Mentoring - 5th round of theMentoringprogrammewillbelaunchedsoon.Thisispartofouron-goingcooperationworkwithNorwaytopromotereciprocalopportunitiesforoilandgassupplychaincompaniesonbothsidesof theNorthSea.We jointlychampion this initiativewithINTSOK–NorwegianOil&GasPartnersinconjunctionwiththeNorwegianMinistryofPetroleum&Energy.

ContactRebeccaBarryat

[email protected] toregisteryourinterestintheprogramme.

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Working with the UK Supply Chain - Fabrication Sector

AkeyobjectiveoftheIndustryDevelopmentteamistopromoteeconomicvaluetoUKbusinessfromtheentirelifecycleofUKCSprojects.ThereiscurrentlyafocusontheUKfabricationsectoras ithasthepotential tocreateandsupport largenumbersof jobs,generallyinchallengedareasofthecountry.WeaimtohighlightthecapacityandcapabilitytotheOperatorswithmajornewprojectsanddevelopmentscomingforward.InadditionweproactivelyencourageOperatorstoaffordcompetentUKfabricatorstheopportunitytobidfornewcontracts.ThisworkhasrecentlybeenreinforcedbythecreationoftheOffshoreIndustryGroupwhichwillbeledbyformerEnergyMinisterCharlesHendrywiththeremitofpromotingUKcontent.

CharlesHendrysaid‘itisimportantthesecompaniesaregivenafairopportunitytobidforthework,sowecanbuildupontheskillsandexpertisewehavedevelopedover thepast fourdecades in thissector, Ihopewecancontinue thissuccesswherethereisUKcapabilityandcapacityforfabrication.’

Historically the UK Fabrication sectordevelopedanimpressivecapability,andonewhichismirroredinourindigenousexpertise in Front End Engineeringand Design. During the decade2000-2009 there was considerablyretrenchment and a number of yardswere mothballed, however followingthe recent renaissance in investmentlevelswehaveseenyardsresurrectedand undertaking significant projectssupportingthousandsofskilledjobs.

Including:

• Gaz de France-CygnusprojectbeingbuiltatHeerema,HartlepoolandBifab,MethilFife

• Premier Oil–SolanjacketandtopsidebeingbuiltatBiFabMethilFife• Bluewater–HaeweneBrimFPSObeingrefurbishedattheGlobalNiggyardinthe

CromartyFirth.• Talisman –MonarbjacketbeingbuiltatOGNonTyneside• ConocoPhillips–BritanniaModulebeingfabricatedbyWiltonEngineeringServices

atTeesside• Nexen–GoldenEagleaccommodationmodulebeingbuiltatSLPLowestoft

©DerekGordondgordonphotography

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Maximising the Economic Benefit

Commercial Code of Practice

The Commercial Code of Practice (CCoP) has become an established basis fortransactionsconcerningUKCSassets,minimisingcostsandtimeinvolvedinnegotiationsand supporting positive commercial behaviour. This includes the expectation thatstandardformsofagreementwillbeusedwhereverpossible.ThemajorityofcompaniesholdinglicenceinterestsontheUKCShaveagreedtoabidebytheCode.Useofthecodeis supportedbyaChampion foreachcompanywhocanhelp to facilitate solutions tocommercialdisputes.

www.gov.uk/oil-and-gas-codes-of-practice

Infrastructure Code of Practice

TheCodeofPracticeonAccesstoUpstreamOil&GasInfrastructure(ICoP)providesaframeworktopromotepositivenegotiationsonsharedaccesstopipelinesystemsandtherebyencourageinvestmentbothinproducingfieldsandnewperipheraldevelopments.AllinfrastructureownershavesigneduptotheCode.TheCoderequiresthatprospectiveusersinvitetheSecretaryofStatetostepintonegotiationsifagreementbetweenpartiesisnotlikelyinareasonabletimeframe.ThishasbeenstrengthenedintheEnergyAct2011toallowtheSecretaryofStatetostepinonhisowninitiativeifhebelievesthatthereisnorealisticprospectofagreementbeingreached.

Improved Access to Infrastructure

In 2012 the PILOT Infrastructure Access Group proposed ways of achieving increasedcollaborationbetweenOperators,asawayofmaximisingthereservesoftheUKCSthatcan be developed while the relevant infrastructure is still available for use. RegionalTaskForcesarebeingestablishedtoputtheseproposalsintopracticeanddevelopthemfurther.

www.gov.uk/oil-and-gas-infrastructure

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Technology

AsthebasinmaturesandrecoveryoftheremainingreservesbecomesincreasinglychallengingthedevelopmentanddeploymentofnewtechnologiesandinnovativesolutionsisakeyenablertoachievingtheproductiongoalsofPILOT.

Weworktofacilitatethedevelopmentofnewandemergingtechnologyfromconcepttodeployment:

• Working collaboratively with the Technology Strategy Board on Research andDevelopment;

• Working closely with the Industry Technology Facilitator to foster innovation andfacilitatethedevelopmentandimplementationofnewtechnologiesintothemarket;

• APILOTworkgrouphasbeensetuptodevelopatechnologystrategyfortheUKCS.Itisexpectedthiswillbecompletedbytheendoftheyear.

Contact:

[email protected]

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Delivering an Industrial Strategy for Oil and Gas

EarlierthisyearthreeSecretariesofState,EdwardDaveyfromDECC,VinceCablefromBISandMichaelMoorefromtheScotlandOffice,cametogetheralongwithIndustrytolaunchtheGovernment’sOilandGasstrategyinAberdeen.

Developed in partnership with industry, the strategy offers investment confidenceby setting out a clear path to exploit the UK’s remaining resources and overcome anincreasinglychallengingproductionenvironment.

Thestrategysetout40actionpointsandallocatedIndustryandGovernmentchampionstodriveeachoftheseforward.Progresswillbemonitoredandreportedto Industryatregularintervals.

Highlightsfromthestrategyinclude:• Encouragingmore technologicaladvancement throughresearchanddevelopment,

whichwillenable industrytobetterunderstandcomplexreservoirs,reducedrillingcosts,improveefficiencyandenhanceproduction.

• DevelopingtheUKSupplyChainfurthersothatUKSupplyChainfirmscanbuildon

the£27billionofrevenueswhichtheyalreadygenerateintheUK.

• Workingtofilltheskillsgap.Thisisseenasoneofthebiggestchallengesfacingtheoilandgasindustry,especiallyforSmallandMediumEnterprises(SMEs).

• MaintainingafiscalregimethatencouragesinvestmentandinnovationintheUKCS

ThestrategyfostersstrongandmeaningfulcollaborationbetweentheGovernmentandIndustryandwill help to focuseffortsonaddressingparticularareasas listedabove.Itwill furtherstrengthentheoilfieldservicessectoracrossthecountry,boost investorconfidence,safeguardjobsandhelptomaximiserecoveryofBritain’soilandgasreserves.

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TheRt HonEdwardDaveyMP,SecretaryofState for Energy and Climate Change said:“Aswemovetoalowcarboneconomy,oilandgaswillremainavitalpartoftheUK’senergymix for decades to come – providing energysecurity,jobsandinvestment.

“I want to pay tribute to the oil and gasindustry. Operating in some of the toughestconditions anywhere in the world itspearheads revolutionary technology inoffshoreexplorationandproduction.

“Alongside the many opportunities whichthe North Sea offers, there are of coursechallenges too. I believe that the joint workbyGovernmentandindustry,throughPILOTandtherecentlylaunchedIndustrialStrategy,willpayrealdividendsandensurecontinuinginvestmentandsuccess.”

www.gov.uk/government/uploads/system/uploads/attachment_data/file/175480/bis-13-748-uk-oil-and-gas-industrial-strategy.pdf

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Review of UK Oil and Gas Recovery

SecretaryofStateEdwardDaveyhasinvitedSirIanWood,recentlyretiredChairmanofWoodGroup,toconductareviewintohowtheUKcanmaximisefutureeconomicrecoveryofoilandgasfromtheUKContinentalShelf.

Whileinvestmentisrisingandnear-termprospectsfortheUKContinentalShelf(UKCS)arestrong,itisoneofthemostmatureoffshorebasinsintheworldandthereforefacesunprecedentedchallengesthatrequirenewthinkingandapproaches.SirIanbringshugeexperiencetothereviewfollowingfourdecadesofleadershipintheUKCS,andisuniversallyrespectedintheindustry.

SirIanwillworkwithIndustry,GovernmentandotherstoconductrobustanalysisinordertoproducehisrecommendationsthatwillshapethefutureoftheUKCSinthedecadesahead. Sir Ian will publish emerging conclusions in the autumn with his final reportexpectedinearly2014.

SirIanWoodsaid:“The UK’s oil and gas Industry is a key component of economic growth, ourenergysupplyandtechnologydevelopmentandwemustdoallwecantoensureits potential is reached. I will consult with Government and Industry on the keylinesofinquirythatwillmakearealdifferencetoimprovingoureconomicrecoveryincludingoptimisinguseofandextendinglifeofinfrastructure,productionefficiencyandmaximisingtheuseofkeytechnologies.”

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The Office of Unconventional Gas and Oil (OUGO)

TheOfficeofUnconventionalGasandOil(OUGO)wasestablishedinMarch2013toco-ordinateworkonunconventionalgasandoilacrossotherpartsofGovernmentwithaninterestorresponsibilityinthisarea.Asummaryofitsobjectivesare:

Making the most of our natural resources

• Makingthebestuseofournaturalresources,encouragingthedevelopmentinawaythatmaximisesthebenefitstotheeconomywhilesupportingthetransitiontoalowcarboneconomyattheleastcost.

• WorkwithHMTandthetaxationsystemtosupportthegrowthoftheseindustries.

Enabling development, protecting the environment and safeguarding the public

• Ensure regulation of the Industry is as streamlined and simplified as possiblewhile remainingsufficiently robust tosafeguard thepublic, theworkforce,and theenvironment.

• EnsureGovernmenthastherightpoliciesinplacetoensuresafedecommissioningofsitesandhighqualityrestorationoftheland,withoutincreasingburdentothepublicpurse.

Making sure local communities benefit from development in their area

• Ensure the delivery of a coherent framework for the delivery of local communitybenefits.

Supporting public engagement

• Helpingpeopleunderstandthefactsaboutunconventionalgasandoil.• Supportlocalauthoritiestoengagewiththeircommunities.

Building our knowledge base

• Support the provision of comprehensive, timely and accurate information onunconventionalgasandoilrecovery.

• Liaise with European and International bodies so we can learn from experienceselsewhere.

Contact:

[email protected]

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© Crown copyright 2013

URN:13D/184

DECC – Aberdeen OfficeEnergy Development UnitDepartment of Energy and Climate ChangeAtholl House86-88 Guild StreetAberdeenAB11 6ARTelephone: 01224 254000

DECC – London Head QuartersEnergy Development UnitDepartment of Energy and Climate Change3 Whitehall PlaceLondonSW1A 2AWTelephone: 0300 060 4000

Email: [email protected]

UK Government Website DECC Page: www.gov.uk/government/organisations/department-of-energy-climate-change

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