Stewardship of the UK’s Oil & Gas Resources

Brownfields

The Brownfields project was launched in early 2004 to identify new means to maximise recovery from fields currently in production. It identified three key areas to address:

(1) Good Stewardship of UKCS assets will identify opportunities and highlight new means to realise them. In some cases the same operator will manage the asset (fields, pipeline or onshore plant) for its entire economic life. In other cases assets will change hands during their life, with new operators bringing a new insight and new expertise.

The DTI has now replaced the annual field reports with a new “stewardship process” which was launched in April this year.

In the first stage of the work, the DTI will collect and review key metrics on the current management and the pursuit of nearby opportunities for a selection, probably around ten percent, of fields. The process will be used to focus on those fields, which for whatever reason, risk failing to achieve their full potential and will collate production, subsurface and reserves data as well as safety performance. Individual results will be fed back to all participants.

A second stage of the process will lead to detailed discussions with the operator and Joint Venture partners for those fields regarded as being “at risk”. Whilst these discussions are designed to encourage a fresh look at investment opportunities, in an extreme case they could ultimately lead to the DTI serving a work programme or the Operator being replaced. The process will be reviewed after its first trial this year and amended to incorporate feedback. Further details are available on both UKOOA and DTI websites.

(2) Decommissioning liabilities are seen to have a negative impact on asset trading and need to be addressed. Decommissioning costs are currently estimated to be £15 – 19 billion and will be shared between industry and government. In response to the Brownfield project, industry is preparing a standard decommissioning agreement to facilitate sale and purchase of oil and gas fields and is working with the supply chain and government to reduce the technical costs and ensure clarity on the environmental obligations. Uncertainty on the future fiscal treatment of decommissioning costs is seen as a potential deterrent to new investment in the UKCS and is being addressed.

(3) New cross-industry partnerships and business models will deliver new opportunities and sustain incremental production. These will focus on drilling and rig sharing, improved use of subsea and supply vessels, enhanced workforce utilisation and targeted use of new technology.