WIRELINE ISSUE 31 SPRING 2015

ACTIVITY SURVEY 2015

FACTS & FIGURES

Q&A – Oil & Gas UK’s economics and commercial director Mike Tholen Q:What does the 2015 Activity Survey show– andwhat must industry do next? A: This year’s Activity Survey is clear on the challenges we face, but also identifies this region’s potential, emphasising the importance of government and industry putting the right measures in place to secure its long-term future. This is crucial, not only for the energy security that domestic oil and gas production provides, but also for the hundreds of thousands of highly skilled jobs, advanced technology and billions of pounds of exports that the industry underpins. The report noted, worryingly, that investment in currently sanctioned projects will fall to £2.5 billion by 2018. A combination of cost and efficiency improvements of up to 40 per cent are needed to give this basin a viable future – and the more we can invest our way out, the less we need to rely on cost control alone. Q: Howdoes the newregulator, the Oil andGas Authority (OGA), fit into this? A: We said at the launch of the Activity Survey that concerted effort on three fronts is needed – tax, regulation and cost – to make the basinmore attractive to global investors. Government has taken important steps to implement theWood Review recommendations –we now need to see full delivery of those recommendations, in particular the prompt establishment of a well-resourcedOGA. Q:What do the announcements made inBudget 2015mean for the industry? A: Budget 2015 has laid strong foundations for regeneration of the UKNorth Sea through the ten percentage point reduction in the supplementary charge, which reduces the headline rate of tax to 50 per cent; promise to cut petroleum revenue tax by 15 percentage points fromnext year; and the new, simplified, Investment Allowance. It is in the hands of our industry now to build on this by delivering the cost and efficiency improvements required to secure our future.

“

” This year’s Activity Survey is clear on the challenges we face, but also identifies this region’s potential, emphasising the importance of government and industry putting the right measures in place to secure its long-term future.

ise stated)

£1 billion spent on decommissioning activity, the highest annual spend on record £1 billion

1.42 million

barrels of oil equivalent

1.42 million boe per day produced, slowing production decline

ds

13

8 to

wells in 2015

Investment is forecast to fall sharply to £9.5–11.3 billion in 2015, depending on current project performance and investment £9.5 billion in 2015

Only eight to 13 exploration wells are forecast to be drilled in 2015 as the lower oil price adds to existing barriers

de

Download the report at www.oilandgasuk.co.uk/ activitysurvey

nities

W I R E L I N E - I S S U E 3 1 S P R I N G 2 0 1 5

2 1