In June 2013 Sir Ian Wood was tasked by the U.K.’s Secretary of State, Ed Davey, with conducting an independent review of the U.K.’s offshore oil and gas industry and its regulatory regime in order to find the best way forward to maximize the recovery of the country’s reserves and help maintain security of supply.

He gave his findings earlier this year, with the review estimating that full and rapid implementation could deliver 3 Bboe to 4 Bboe more than would otherwise be recovered during the next 20 years—an initiative worth an estimated ￡200 billion (US$313 billion).

This led to a government commitment to fully implement the recommendations, including developing and committing to the new strategy for targeting the U.K. Continental Shelf (UKCS), known as Maximizing Economic Recovery (MER) U.K. This also led to moving stewardship of the offshore sector to the new arm’s-length body, the Oil and Gas Authority. MER U.K. will also work with the offshore industry to develop and implement new strategies, such as those focusing on exploration and decommissioning cost reduction.

During PETEX, Sir Ian gave the opening keynote address, in which he addressed the worrying decline in the U.K.’s offshore exploration activity, with only 13 exploration wells drilled so far this year (as opposed to the 25 originally committed to in licensing round applications for the year). Exploration drilling levels have been much less than what is needed to deliver what MER U.K. has set out to do, he said, while “nothing like enough seismic acquisition” has begun to take place if the industry is to achieve and maximize recovery. In addition, costs have risen by around 20% per year over the last decade, and it is estimated that more than one-third of U.K. offshore assets are currently up for sale, he added.

Despite this dire outline, Sir Ian went on to say that the industry could achieve what is set out in the MER U.K. plans and revitalize the U.K. sector, but key to its success would be the industry’s commitment to collaboration, in terms of exploration, development and operations.

He went on to highlight the “encouraging” exploration work done by Statoil, Lundin Petroleum and others on the U.K.’s side of the maritime North Sea border. The most noticeable work in this region has led to the discovery of the Johan Sverdrup Field—one of the largest oil discoveries ever made offshore Norway with recoverable reserves between 1.8 Bboe and 2.9 Bboe. This field was discovered in mature acreage that had previously been drilled and dropped by others.

This success, he hoped, would lead to those insights being applied on Statoil’s U.K. assets. “They have a huge amount of experience and knowledge east of the border, and they are now just beginning to look at the areas to the west,” he said. “Johan Sverdrup got everyone very excited. I like to think that Statoil has a huge amount of knowledge generally in that region and that that might lead to some more serious exploration taking place on the U.K. side of the coin.”

He concluded, “There is a very clear message here. All sectors of the industry are beginning to think about and look at collaboration and what it means for them—both the benefits and the opportunities. There are some cases where it’s absolutely clear that there will be huge benefits from collaboration, particularly in newfield developments—the sharing of one pipeline rather than two, for example. I think that exploration is an area where there’s also huge potential for collaboration, and my message is that if we don’t achieve a reasonable level of collaboration in the next two, three or four years, we will under-recover a whole lot of the U.K.’s oil and gas reserves.”

Offshore