Economic Report 2013

• Exports – there have been more exports by the industry than anticipated and the UK’s subsea sector is renowned for its excellence around the world • Investment – investment has exceeded expectations in recent years, because of higher oil prices and the remaining potential of the UKCS. The matters addressed by PILOT are aimed at the overall objective of recovering the maximum amount of the UK’s oil and gas resources that can be economically achieved. However, the specific matters being addressed do change as the years go by. Currently these are: • Decline in exploration In response to the sharp decline in exploration drilling in 2011 (see page 28), PILOT’s Exploration Task Force was created to identify the main obstacles to exploration drilling and to determine what government and industry could do to increase activity. • Improved/enhanced oil recovery (IOR/EOR) As oil and gas become more difficult and costly to extract, the industry is investing in improvedmethods of extraction. As a result, IOR and EOR work groups were created to undertake a formal analysis of the benefits of using new technologies to increase recovery from the UKCS. • Infrastructure access PILOT’s Infrastructure Access Group was formed in 2012 and has three areas of work: the Infrastructure Code of Practice 5 (ICoP), criticality of infrastructure and transformational options for critical infrastructure.

One of the recommendations of this group was to establish areas of ‘special economic interest’ on the UKCS to encourage greater co-operation between parties, targeting critical infrastructure hubs to promote maximum economic recovery. Work groups have been established that are looking at specific infrastructure issues in the northern and central North Sea. • Production efficiency As a result of the rapid decline in production efficiency (see page 21), PILOT has launched a Production Efficiency Task Force that is challenging the industry to increase efficiency from 60 per cent to nearer 80 per cent. • Technology Technical innovation and application can and will play a major part in enhancing the future of the UKCS by improving exploration success, increasing recovery and safely extending the lives of fields. The range of technologies required is broad with the required funding, policy and supply mechanisms complex. Therefore, PILOT has commissioned the creation of a Technology Strategy to help establish the UK as a leader in selected areas of oil and gas technology, thereby strengthening the supply chain. The success of past PILOT initiatives has demonstrated the willingness of government and the industry to find solutions to difficulties in a co-operative manner. There will be a continuing need to work together to ensure that the productive life of the UKCS stretches to at least 2050.

5 To ensure that new and smaller companies can develop and bring on-stream discoveries which require use of others’ infrastructure, the industry developed a Code of Practice for third party access to infrastructure, known as ICoP. Adopted in 2004 and updated since, the ICoP outlines the best practice and expected behaviour of those who conduct negotiations for access to infrastructure. More information about ICoP may be found at http://www.oilandgasuk.co.uk/knowledgecentre/InfrastructureCodeofPractice.cfm

33

ECONOMIC REPORT 2013