UK regulator warns of 'serious threats' to North Sea sector, vows focus on resilience

London — The UK North Sea oil and gas industry is being hit hard by the coronavirus and economic turmoil, and the regulator is focused on safeguarding energy supply and ensuring resilience in the face of "serious threats", Oil & Gas Authority CEO Andy Samuel said Tuesday.

Maintaining critical infrastructure remained "vital" and the OGA was working with government departments on financial, operational and logistical aspects of the crisis, Samuel said.

"As the COVID-19 pandemic continues to impact on our way of life, the economic impact, combined with a significant fall in the commodity price, has hit the UK oil and gas industry hard," Samuel said.

"The scale of the challenge is considerable, and the efforts of all parties are fixed on successfully navigating through this unprecedented period of uncertainty."

The OGA "is firmly focused on its role of working with industry and government through this difficult time to safeguard both the energy supply we know is needed for the foreseeable future and the thousands of jobs which help deliver it."

Samuel said the OGA was switching some priorities, with an immediate focus on areas such as financial and operational resilience, and operations and maintenance, and would show flexibility on some other regulatory requirements.

Dating from the 1960s, the UK oil and gas industry is well past its production peak, with oil output running at 1.1 million b/d, barely half that of nearby Norway, though it remains a global center of offshore expertize and technology.

Industry group Oil & Gas UK said last week it was moving to a crisis regime of minimal offshore staffing in which non-essential maintenance and major project work would be postponed, while maintaining production.

Forties question-mark

Samuel on Tuesday did not explicitly mention one project still in the calendar, a major three-week shutdown of the Forties pipeline for maintenance upgrades starting June 16, which has raised question-marks due to the numbers of workers involved and the risk of spreading the virus.

Forties operator Ineos reiterated Tuesday that the shutdown was still going ahead, despite government measures to lock down the UK in the face of the pandemic.

Oil & Gas UK has called on the government to provide financial support to the industry as part of wider efforts to stimulate the economy, with a view to preserving jobs and the North Sea supply chain, and ensuring long-term investment.

On Monday, OGUK CEO Deirdre Michie said government promises of financial help were welcome, but questions remained over implementation.

"The strong response from the UK government and their clear determination to support both workers and companies is very welcome. It is now crucial to ensure companies can easily and rapidly access this money as for many businesses and individuals cash flow is now vital," Michie said.

Samuel said the OGA had not lost sight of the importance of achieving the UK's ambitions for net zero carbon emissions by 2050 in the midst of what he called "serious threats facing the sector."