Wireline Issue 44 - Spring 2019

All roads lead to Vision 2035 Vision 2035 sets out the potential of the UK oil and gas industry to secure resources at home and boost supply chain exports abroad. OGUK chief executive Deirdre Michie explains more about the campaign, and why it matters.

A s the UK’s offshore oil and gas industry emerges from one of the most prolonged downturns in its history, it faces some of its biggest challenges to date. Globally, energy demand continues to rise unabated alongside the increase of global GDP, with oil and gas still expected to satisfy nearly two- thirds of the UK’s energy needs by the late 2030s. At the same time companies continue to face fierce international competition for investment against other basins, requiring the industry to focus on sustaining and deepening its competitive position through efficiencies and cost focus. From securing the next generation of skilled talent to seizing fresh opportunities in technology and decommissioning, industry stands at a crossroads. We speak to Oil & Gas UK chief executive Deirdre Michie about the industry’s Vision 2035, what it is and why it might hold the key to unlocking the full potential of the UK’s pioneering energy sector. What’s your verdict onwhere industry is now? In our 2018 Economic Report we said that industry is at a crossroads. What we’re seeing as we emerge from one of the most sustained downturns in our history, is that the tremendous effort from industry with the engagement of Government and regulator are yielding results: improved operational performance, a more competitive and stable tax regime and a sector that is more efficient and open to new technology and smarter ways of working. In 2018 we also saw more project approvals than in the previous three years combined. We ended the year on a bit of a high, with Apache’s Garten coming onstream just eight months after discovery, and Total making a significant discovery with Glendronach. But we continue to see real pressures on the supply chain, which is critical to our success and will be looking to see how we can support the work flow increasing in the coming months. Keeping that pipeline of work flowing will be critical to sustained recovery, which is why we are still concerned about the record-low drilling rates in the basin.

Given that as an industry we are very much at a crossroads what we do this year will likely be what sets our path to the future. When we look at the challenges we face and the opportunities ahead of us, all roads lead to the need for a shared view of the future – one that we can all get behind, and that is Vision 2035. Can you tell us more about Vision 2035 and why we need it? In essence, Vision 2035 is about a shared ambition of the potential of the UK’s oil and gas industry. It has two main strands. One is about extending the productive and competitive life of our indigenous industry, sustaining jobs and contributing to the UK’s economy and security of supply. The other is about taking full advantage of our world-class supply chain to support the industry at home, enabling it to win a bigger slice of the global market for energy services and to win business in other sectors. By adding a generation of productive life to the UK Continental Shelf (UKCS) and expanding supply chain opportunities, we can ensure the UK’s offshore oil and gas industry can continue to power the nation, support highly skilled jobs, contribute substantially to the economy and compete on the world stage for many years to come. It’s a vision that has been developed and driven by industry, for industry. That’s the big picture; the value we can add for businesses, people, economy and society. In terms of numbers, it means realising the full hydrocarbon potential on the UKCS through our Maximising Economic Recovery (MER) agenda, which will result in us still producing more than one million barrels of oil and gas a day in 2035 – 70 years after production first started. Delivering the Vision will add billions of pounds of revenue to the books of companies in the supply chain, positioning it to double its share of international business and diversifying. This is why the Vision is important. Today, oil and gas provide about 75 per cent of the UK’s primary energy, and are expected to serve 66 percent of demand by the 2030s.

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