This paper examines the issue of how the viability of activity in the UKCS may best be maintained in the context of the new world environment. This environment is personified by (1) continued relatively low but volatile oil prices, (2) keen competition among producing countries with OPECs market power considerably reduced, (3) strong, global competition for investment funds with much of the world including the FSU now attempting to attract private investment, (4) modest oil demand growth, and (5) increasing environmental concerns and associated regulatory pressures. These features will be illustrated.
Activity in the UKCS is likely to continue to take place within this context over the next few years. How can a mature province best adapt to this environment? Considerable opportunities are still available because the actual and potential reserve base is still attractive. To maximise the opportunities appropriate actions are required by all players. Government should attempt to ensure that (1) regulations do not add unnecessarily to costs nor delay projects, (2) taxes do not inhibit projects (3) agreement and relations with other countries (including EU) take into account the needs of the UKCS and (4) R and D in the petroleum sector is fostered Appropriate Government behaviour can reduce the perceived political risks. Examples where Government initiatives are desirable will be given.
Oil companies and the major supply and contracting companies will continue to have competing calls on their limited budgets. Success in the UKCS will depend upon continued innovations in both technology and managementVwork practices, particularly directed towards cost reduction. The continued role of CRINE (with the associated technique of partnering in particular) will be discussed. The issue of how innovations and cost reducing techniques developed in the North Sea can be deployed elsewhere will be raised.