Offshore Australia can benefit from UK model

OIL and gas exploration off Western Australia and Victoria can benefit by adopting the innovative approach that has revitalised operations in the UK Continental Shelf, according to the British High Commissioner to Australia.
Offshore Australia can benefit from UK model Offshore Australia can benefit from UK model Offshore Australia can benefit from UK model Offshore Australia can benefit from UK model Offshore Australia can benefit from UK model

Addressing yesterday’s opening session of the 2007 AustralAsian Oil & Gas Conference and Exhibition in Perth, Helen Liddell, a former Energy Minister in Blair Government, said operators in the UK Continental Shelf have had to introduce change.

“That change has brought a climate of innovation and technological advance that we believe can be of value Western Australia and off the coast of Victoria,” she said.

Liddell warned delegates not to write off the UK Continental Shelf (UKCS) as rumours of problems were greatly exaggerated.

“UKCS is a mature region, and although some have been overly hasty to write it off, look at the statistics,” she said.

“By the end of 2006, cumulative oil and gas production will have reached 36.5 billion barrels of oil equivalent, with as much as 15-20 billion barrels still remaining.

“Exploration and appraisal drilling over the last three years is 50% up on the previous three, and the ratio of successful wells continues to be encouraging, [although] the 10,000th well drilled here is well past.”

She conceded that forecasts were suggesting the UK will be importing 80% of it total gas requirements by 2020, but said this was driving up initiative and drive in UKCS exploration.

“The recent Energy Review in the UK had identified three key areas that we will concentrate on: brownfield development, already very attractive to the independents; the area West of Shetland; and the commercial framework within which we work,” she said.

“In the brownfields, we know from experience that new approaches can maximise these fields, maybe not with headline-grabbing major projects, but through paying attention to the smaller details – getting maintenance and reliability right, studying then sorting out over under-performing wells, and selecting the right infill wells and keeping costs down.

“This takes high skill. It is a growing sector of the industry and one with great international application, and it is delivering.”

Liddell said mature fields investment had risen by over 40% over the last three years, with a similar increase in development drilling.

“During all my years as Energy Minister, the area West of Shetland was the Holy Grail. Now all of the key operators in the region are part of a taskforce to meet infrastructure needs,” she said.

“Everyone knows the potential but there are real challenges to development, key among them to gather a critical mass of discovered resources able to sustain the large investment for gas infrastructure that would be critical to opening up the area.

“When the industry works together, great things can be achieved. It is possible for firms to work together without hampering commercial interests.”

Driving the industry forward required a dynamic commercial framework, according to Liddell.

“Industry is already signed up to Commercial and Infrastructure Codes of Practice that can speed up deals and improve transparency,” she said.

“When we surveyed commercial deals in 2005, it was found that there had been real improvements in behaviour, including a willingness to stick to timetables, and even negotiators empowered to take decisions.

“There is still a way to go, there are still cases of poor communication and attempts to tie negotiations to other deals, but progress is clearly there.”