comment David Foxwell
2012. However, executives said that success will rely on more than the high price of oil, growth in energy demand or even a recovery in economic conditions. The discussions followed the publication of ‘Big Spenders: The outlook for the oil and gas industry in 2012’, the second Economist Intelligence Unit report commissioned by GL Noble Denton. According to the company, oil and gas sector leaders’ confidence in increased investment has continued to grow during the first quarter of this year, thanks to the improved prospects for global economic growth. However, the Economist Intelligence Unit warned that a potential further rise in the sector’s confidence might be overshadowed by the risk of ‘black swan’ events such as political conflicts, and major oil and gas accidents. Another poll showed that oil and gas professionals remain uncertain over the state of US deep water R&D activity since the Macondo incident in the Gulf of Mexico two years ago. According to a poll conducted at the Offshore Technology Conference (OTC) in Houston, 52 per cent of participants thought that US deep water R&D activity has stalled since 2010, while 48 per cent said that innovation has continued in the field. However, the poll also showed that confidence in the future of deep water exploration and production has increased significantly over the past six months, as drilling returns to the Gulf of Mexico. Confidence certainly seems to be returning to the North Sea, where the latest licensing round for oil and gas drilling broke all previous records for the number of applications received by the government. A total of 224 applications have been submitted for the 27th Licensing Round covering 418 blocks of the UK continental shelf. It is the largest number since offshore licensing began in 1964 and is 37 more than the previous high total received in the last licensing round.
E A
www.osjonline.com
t about the same time, the oil and gas team at Barclays Corporate Banking division announced that it had been involved in deals providing funding for acquisitions and exploration and production (E&P) amounting to almost US$355 million in the first quarter of this year. The facilities have been provided for companies working in the North Sea and in the Americas, and include a range of reserve based lending for E&P activities in the
Challenges remain but industry in optimistic mood
uropean oil and gas leaders have expressed heightened confidence in the development of the sector this year, following an impressive start to
UK continental shelf, the purchase of assets, letters of credit and corporate working capital funding. The activity appears to reflect a marked upsurge in confidence among operators and service companies, said Walter Cumming, head of oil and gas at Barclays.
H
owever, as previously highlighted in OSJ, plans by the European Union (EU) to introduce legislation to regulate the offshore oil and gas industry in Europe
(see ‘Comment’ in OSJ May 2012) continue to be met with a mix of anger and dismay. It should come as no surprise, therefore, that Oil & Gas UK and the National Union of Rail, Maritime and Transport Workers (RMT) and Unite, another union, have jointly voiced alarm over the plan. Ironically, despite its plans, the Commission acknowledged that the North Sea, including the UK, Denmark, The Netherlands and Norway is already a region where the “risk-based regulatory framework is considered amongst the very best in the world.” Its stated aim, of bringing the rest of Europe up to the standards already present in the North Sea, is admirable, but it is surely going about doing so the wrong way.
In drafting the regulation, the Commission even ‘cherry
picked’ much from the North Sea states’ safety regimes – acknowledging them as the ‘gold standard’. Much of what it has proposed is very closely based on the UK system, but it does not replicate the many important legislative changes made to implement the recommendations by the Cullen Inquiry into Piper Alpha.
Many aspects of the proposed regulation give rise to
concern. To start with, it would require the re-writing or revocation of significant parts of existing legislation. As a result, almost 300 UK safety cases would need to be re-drafted, re-submitted to the HSE and re-accepted, which would divert substantial industry and regulatory resources away from tackling front-line safety challenges and into desk-bound paperwork compliance. The regulation seems poorly drafted and ambiguous. This risks creating widespread confusion over how it should be complied with. This confusion will be heightened by the absence of interpretative guidance and completely impractical timescales. This will inevitably delay new oil and gas field development, with potentially serious knock-on effects for investment, jobs, oil and gas production and energy security in the UK and elsewhere. OSJ
Offshore Support Journal I June 2012 I 5
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