50 year old North Sea reborn through Energy Bill
50 years since the discovery of gas in the North Sea the Energy Bill heralds regulatory changes that should help support its future
In September 1965, nearly 50 years ago, the first gas was discovered in the North Sea by the 5600 ton drilling barge Sea Gem.
The well that it drilled now forms part of the West Sole gas field, Which BP sold in 2012 to Perenco. 50 years on and the UK North Sea is struggling to live with oil prices that have remained stubbornly below $70 and recently dipped as low as $42.23.
But despite its status as a mature basin, the North Sea continues to attract investment and today the U.K.’s newly created Oil and Gas Authority approved the development of the largest oil and gas field in the North Sea in a decade – a £3 billion investment by Maersk in the Culzean field.
Notwithstanding this latest good news, new investment has been hard to come by against a global glut of supply, eroding demand in key growth markets like China, the exploration and production costs in the North Sea and to a lesser extent political risks associated with climate change.
The Government is looking to bring changes with the Energy Bill, which next week enters the committee stage in the House of Lords.
The changes recommended by the Wood Review have for the most part been accepted by the Government in Westminster, who now wait expectantly for the Oil and Gas Authority to deliver during its transition to an independent statutory corporation by next year.
This all depends upon the smooth passage of the Energy Bill through Parliament, which will in part transfer the Secretary of State for Energy and Climate Change’s existing regulatory powers on oil and gas to the OGA.
The expectations are for broad support for the Energy Bill with the exception of changes to the Renewables Obligation, which could be the subject of political wrangling during the various stages of the bill. This fair wind should bring about some of the most significant changes to the regulation of the North Sea for decades and should support continued development.
The Sea Gem went from success to disaster when in December 1965 it capsized and 13 men lost their lives. The subsequent enquiry brought with it the first safety regulations for the North Sea, which is today regarded as one of the best regulated environments. Let’s hope the advent of a new regulator continues this progress and honours the memory of the North Sea pioneers of 1965.