UK O&G in recovery says Wood

Veteran oil and gas magnate Sir Ian Wood has praised the British government for being firmly behind his proposed new regulator, and says the Treasury is finally focusing on recovery
Sir Ian Wood

The former Wood Group chief executive and chairman, who is scheduled to receive a Lifetime Achievement Award at this year’s Oil Council World Assembly in November, believes while the oil and gas sector is going through a “difficult time”, there is still reason for great optimism as a result of the government’s about-turn.

“Production efficiency is not wonderful at the moment, and the fact is that that we need to get exploration going again,” Wood told The Oil Council. “But the fact that the Treasury is doing an external review is extraordinarily important. In the past a whole lot of opportunity has been lost because every company has been doing its own thing in its own way. During this period the size of the regulator has halved as the number of oil fields grew, which was unacceptable.”

Wood said he had spent a considerable amount of time with British Prime Minister David Cameron, Chancellor George Osborne and other senior executives, and explained to them how much money had been lost to the Exchequer in the last five to ten years due to a lack of collaboration. “The oil and gas industry needs to be less focused on scoring legal commercial points against each other and acknowledge that they need each other. It doesn’t just happen in field development; it needs to happen in exploration, decommissioning and the utilisation of facilities. It is to the operators’ advantage to work together,” said Wood.

While Wood admits that he would have liked to have seen the new regulator up and running this year: it is scheduled to be set up in March 2015. “Government can never move fast enough, but I think the point to emphasise here is that government is behind the regulator, DECC (Department of Energy and Climate Change) is behind it and the industry is behind it.”

Turning his attention to the recent Scottish independence vote, Wood said the result was unbelievably important for Scotland and the UK. “The Scottish government would have needed all the funds from oil and gas to sustain their economy. I also constantly pointed out that the independents’ estimates of 24 billion barrels to come in the North Sea were inaccurate. “However we now know that there are about 15 or 16 billion barrels to come, and that is still tremendously exciting.”

On the issue of on-shore and off-shore fracking, Wood believes that while the former has great potential the latter would simply be too expensive. “There are some smaller explorations off-shore, but the equipment needed is too expensive. I really don’t see much of a future in off-shore fracking.”

Wood said he was honoured to add the Oil Council Lifetime Achievement Award to his list of achievements in a career spanning half a century. “I was very impressed when I saw the previous award winners and I am honoured to join them.”