The UK oil and gas industry must learn from efficiency changes made to adapt to the lower oil price as it looks towards a future that could be delivered by Vision 2035.
Deirdre Michie, the CEO of Oil & Gas UK will tell a key industry conference tomorrow today that its focus must remain on efficiency, if industry is to maintain the competitive benefits it has worked so hard to deliver.
The head of the industry trade body will also flag the positive future for the basin that could be delivered by Vision 2035 – which outlines the opportunity for the UK Continental Shelf and supply chain over the next two decades.
In her keynote address to the annual Oil & Gas UK conference taking place in Aberdeen, the CEO will say: “We are moving forward with ‘cautious optimism’ recognising that oil market fundamentals have changed almost beyond recognition in the last 10 years and that they are not going to change back any time soon.
“Bold steps have been, and are being taken and we have great examples of companies working differently to improve cost and efficiency and working hard to lock these benefits in for the long term.
“We have halved our average unit operating costs over the last two years from around $30 to $15 per barrel while safely increasing oil and gas production.
“Reflecting improvements in capital efficiency, the development costs of the projects that have been sanctioned averaged half of those approved in 2013 and are expected to fall further this year.
“The sustainability of these improvements is always under scrutiny. We know that some of them have been achieved by tough rate reduction; job losses; retendering and, quite frankly, by putting severe pressure on the whole supply chain.
“But we also know that up to two thirds of these improvements are about efficiency and better ways of working.
“The cynics say that we are a cyclical industry that never learns its lessons. Well this time we have an opportunity to do things differently – especially if we remind ourselves that we have been part of the problem and therefore we all need – including the cynics – to be part of the solution too.”
Ms Michie adds: “Vision 2035 conceived by the Oil and Gas Authority and shared by industry and other stakeholders, states that we can be a global energy industry, anchored in the UK, powering the nation and exporting to the world.
“This vision is underpinned by the aspiration to add an additional £290 billion to the UK economy over time.
“We can deliver this by extending the life time of the basin through halving the rate of production decline and doubling the supply chain turnover – through extra domestic activity and raising the bar in terms of exports.”