Companies across the industry here in the U.K. are desperately trying to find a way to revive a sector that has become moribund. Get your dictionaries out—that means “close to death.”

Of course, even if newfield investment slumps more than it already has—currently estimated at 50%—production will continue here for decades yet. But much of what is estimated to be extractable (more than 20 Bboe in reserves) would remain in the ground. In this case, the recommendations in last year’s report by the estimable Sir Ian Wood for “maximum economic recovery” from the sector would be unachievable.

Close observers of activity here will look at both the industry and the government and say they are only getting what they deserve. From the government’s perspective, it has always seen the oil and gas sector as no more than a cash cow—the 1980s Conservative government of Margaret Thatcher paid the cost of large-scale unemployment caused by closing steel mills, coalfields and shipyards with tax revenue from offshore production—and little has changed in 30 years.

The current Conservative government slapped on an extra 12% two years ago on the already punitive supplementary corporation tax (SCT) charged on the U.K. oil industry. When Chancellor of the Exchequer George Osborne withdrew the add-on in the March budget but left the rest of SCT in place, the industry groveled and said, “thank you, thank you.” With long-term production in decline, however, there may be precious little more revenue to collect.

The U.K. industry, as is often the case elsewhere, does not know how to fight its corner. It accepts missives from environmental and government agencies without putting forward reasoned arguments for why it does things.

I remember being at a press conference years ago when the industry wanted to drill in the eastern Gulf of Mexico but was prevented from doing so by a combination of environmental and tourism interests. The then-president of Chevron threw up his hands, saying the industry could not win the PR battle. It was a pathetic response from a multibillion-dollar industry.

The Wood report pushed for a new regulator—now the Oil and Gas Authority (OGA)—which it sees as the savior of the U.K. sector. Why? Will OGA have more teeth than its predecessors?

While no government—except Saudi Arabia—has any influence on the oil price, only treasury-backed changes in rules will make any difference.

First, as the oilfield adage goes, you only make money by drilling wells. The U.K. government has to allow, as the Norwegians do, the write-off of drilling costs to make exploration activity less risky. And OGA has to have the authority to force operators to undertake more well intervention work to get the most out of existing fields.

The former is unlikely unless the industry can better explain why it needs it, and the latter will require more force of will. Can it happen? Possibly, but it is not where I am putting my money. At present, only rising demand and oil price, plus cost reduction, can save the U.K. sector.

Offshore