Economic Report 2013

recent years, most new developments have not involved the construction of large, new production platforms with their own pipelines to shore. Instead, the tendency has been to use existing infrastructure for new developments which has two main benefits: it extends the infrastructure’s life and allows smaller fields to be developed economically. Today,most newfields are small when compared with the early giants such as Leman, Forties and Brent. Also, remaining reserves are increasingly difficult and costly to extract. As a result, there has been a drive to make the industry more cost effective, without compromising safety or the environment, so that the UKCS can continue to win investment for new projects. PILOT, the government and industry task force, was formed in early 2000 to develop an appropriate strategy for delivering a sustainable, long-term future for the UKCS. It was born out of a crisis. As oil prices fell to $10 a barrel at the end of 1998, all stakeholders in the offshore oil and gas industry realised that powerful factors outside their control could jeopardise the contribution that it makes to the economy. PILOT is a unique arrangement between the industry and government, uniting senior management inoperators, contractors, suppliers and relevant government departments who are working co-operatively to deliver quicker and smarter solutions aimed at securing the maximumeconomic recovery of the country’s oil and gas resources. This was and remains PILOT’s overall objective. It meets twice a year and is chaired by the Secretary of State for Energy and Climate Change and includes around 13 industry representatives, as well as representatives of government. Now in its 14th year, PILOT covers matters relating to all phases of the oil and gas life cycle, from exploration, development and production through to decommissioning. The task force

promotes initiatives to reduce costs, eliminate un-necessary barriers and maximise the effectiveness of resources. The goal is to bring about a future that could still see the industry meeting approximately half of the nation’s oil and gas needs in 2020. Through its various initiatives, PILOT has been extremely influential in advising and supporting both government policy and industry practices and has had various successes as a result of its innovative and co-operativework. These include: • Attracting new players and global investment – a diverse range of new players has entered the province which has led to more small fields being developed and the introduction of new technologies. • Stimulating activity – the Fallow initiative has placed still prospective acreage into the hands of companies that want to develop it. • Enabling access to infrastructure – companies are able to negotiate with owners for access to production facilities and pipelines for processing and transport of oil and gas. This has typically enabled subsea tie-backs of small fields to established infrastructure hubs, although there are still various challenges in this regard. • Improvingstewardship –anabilitytoanalyse thoroughly the potential of producing fields has been created, through techniques such as infill and near-field drilling, together with a more transparent mechanism for the sharing of infrastructure data. • Facilitating new technology – the Industry Technology Facilitator (ITF) has been established to foster innovation and promote the development and use of new technologies. • Training and skills – the industry workforce has increased by 100 per cent throughout the life of PILOT, and the oil and gas academy, OPITO, was established.

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ECONOMIC REPORT 2013