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Production and drilling declines challenge UK
Posted 06.07.2012 10:12:46 av John Bradbury
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Oil and Gas UK has predicted challenges remain for the UK offshore industry in keeping production up and arresting a fall in drilling activity.

Highlighting issues facing the industry going forward,. Malcolm Webb, chief executive of the UK offshore industry body, warned that although the fiscal environment has improved with better predictability in the tax regime in the last year, halting production and drilling declines are still big issues for the industry.

“We will need to address the decline in production which accelerated unexpectedly last year as well as the fall in exploration drilling,” Webb states in his introduction to Oil and Gas UK's annual report for 2012.

In the annual report, Oil and Gas UK reveals that surveys it has conducted among exploration companies suggests a positive outlook for drilling in 2012, with operators forecasting up to 64 potential exploration and appraisal wells this year.

But only 40 of these wells had rig commitments at the time the report was written in May this year: “As a consequence, Oil & Gas UK anticipates that only 35 to 40 of the E&A wells that could potentially be drilled will in fact be drilled in 2012, because of both the tight rig market and other constraints.”

But he also took the opportunity to have a swipe at European Union proposals to centralise control of the offshore safety regime across the North Sea with what he called  “ill-conceived legislation,” referring to new offshore safety regulations proposed by the EU: “If enacted, this new law would be a serious backward step for safety in the UK’s offshore oil and gas areas and for our industry as a whole,” Webb suggests. “We cannot stand back and simply let that happen. So we have objected to and will continue to oppose this damaging proposal.”

Officials at the EU are seeking to redraw offshore safety regulations by centralising health, safety and environmental rules in Europe. Although Oil and Gas UK says the EU has recognised the UK's regime as “the gold standard” for offshore safety, the UK industry group also says the proposed EU regulations fail to replicate legislative changes made to implement key recommendations made by the Cullen Inquiry into the UK Piper Alpha disaster.

Oil and Gas UK has opposed the proposed new EU offshore safety regulations saying its poor drafting will: “....create confusion concerning compliance through uncertainty of interpretation, and together with the lack of interpretative guidance, could hinder or even stop operations until reasonable certainty exists.”

gWe are grateful to both the British and Scottish Governments for their clear support in this, along with, very importantly, that of colleagues in the trade union movement and other parts of the industry in this country and abroad, including all of the other significant European offshore oil and gas producing nations,” Webb adds in the new report. “It is time for the EU Commission to think again.”
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