Maximising recovery from the SNS

Transcription

1 Maximising recovery from the SNS Dr Andy Samuel, Chief Executive Oil and Gas Authority

2 Southern North Sea context Production Significant potential Exploration Daily production 3.7 tcf Remaining from current assets SNS E&A drilling plans Decline partly offset by ongoing investment tcf tcf From further drilling in current fields Undeveloped discoveries (risked) Exploration Appraisal OGA working closely with license holders $1.4 bn sanctioned spend (*) $2 bn unsanctioned spend YTF (*) includes 2016 activity spend Still a lot to play for

3 Working together SNS strategic priorities Rejuvenation Special Interest Group 50 years of production Diverse network of infrastructure SNS at critical juncture Our goal: working together towards MER UK and to mobilise the capabilities of the local supply chain Theddlethorpe gas terminal Cygnus 1 st Gas Great Yarmouth SNS focus Influence & promote E & A activity Support small pool developments Tight gas collaboration across the basin Deliver major developments Gas to wire opportunities Efficient decommissioning

4 SNS opportunities Tight gas 3.8 tcf tight gas opportunity Significant opportunity for collaboration Current drilling costs barrier to development Technology levers Technology Small pools 1.8 tcf small pool opportunity Economies of scale through clusters Consolidation and alignment of licences Technology opportunity Creating alignment "Centrica supports collaboration in the West Sole Area as an opportunity not just to develop the Olympus discovery, but also to enhance recovery from the area." Creating a future for the Southern North Sea

5 The big opportunity Realise full hydrocarbon potential of the UKCS World class competitiveness Expand service sector range, market coverage, double exports Increase the prize by half again over the next 20 years Shaping the future

6 The big opportunity Realise full hydrocarbon potential of the UKCS World class competitiveness Expand service sector range, market coverage, double exports Increase the prize by half again over the next 20 years Shaping the future

7 Systematically removing barriers Mitigating barriers to investment Assets in right hands Licensees not investing or realising potential Access to infrastructure Third parties cannot gain access or access on reasonable terms Price assumption misalignment Disconnect between buyer and seller s assumptions and evaluation Lack of capital Traditional funding models not available JOA structure misalignment Lack of sole risk provisions, preemption rights, and financial capability concerns Divestment packages Do not necessarily ensure that assets are in the right hands Decom Cost uncertainty & lack of DSAs cause deal delay UKCS fiscal regime Lack of tax history transferability OGA flexible and enforcing MER UK Strategy Infrastructure Code of Practice underpinned by powers to impose terms OGA correcting by testing assumptions independently OGA working with investment community to promote opportunities and new models OGA assisting where required; standardised agreements and processes will help OGA clarifying area hubs or strategy synergies to help optimize asset packages OGA to issue cost norms and benchmarking; standardised DSAs needed HMT issued call for evidence to industry on how tax can influence asset transfers

8 Framework and approach Regulatory framework Asset stewardship New approach Cross-lifecycle Supporting performance Strategic approach Area plans Strategic hubs More transparency Collaboration & consolidation Changing All behaviour worked closely and increasing with industry collaboration

9 OGA Success dashboard to January 2017 Value to industry Fast tracked consents Success metrics Number of successes Time saved to industry Tripartite barrels mmboe days Cost Savings m Value of Investments ( bn) Industry impact OGA interventions Decommissioning Exploration Production Supply Chain Technologies Collaboration Dispute Resolution Flexibility Influence Promote Technical Advances

10 Examples of assets changing hands Rosebank SIRGE Schiehallion* Sullom Voe* Magnus* Bressay* 18% St Fergus FUKA Buzzard* Beryl* Anasuria Fields Pipeline Terminal Operator Interest SAGE CATS Jade Huntington Everest, Lomond & Greater Armada* J-Block/Jade* Erskine* Elgin-Franklin* The OGA does not provide endorsements or investment * recommendations. Some transactions are still subject to OGA and other regulatory consideration, their inclusion on this slide is not an indication of the outcome of that consideration. Breagh Clipper South Tolmount Babbage Vulcan Satallites

11 Questions for you Winds of change Are there any further SNS-specific barriers which need to be addressed? What opportunities are you looking to seize through the Industrial Strategy? Are you maximising value through collaboration?