The Wood Review
On 10 June 2013 the Rt Hon Edward Davey MP, the then Secretary of State for Energy and Climate Change, announced a review of UK offshore oil and gas recovery and its regulation, led by Sir Ian Wood.
It was recognised that, whilst the UK’s oil and gas industry is one of national importance and makes a substantial contribution to our economy, energy security and employment, it was facing unprecedented challenges in a very different exploration and production environment compared to when production peaked 13 years previously.
Sir Ian published his report on 24 February 2014, which made four key recommendations to maximise economic recovery from the UKCS:
- Government and industry to develop and commit to a new strategy for Maximising Economic Recovery from the UKCS (MER UK).
A new Regulator should be established and, in conjunction with HM Treasury and Industry should develop an over-arching Strategy for delivering MER UK, adopting a cohesive tripartite approach.
- Create a new arm’s length body charged with effective stewardship and regulation of UKCS hydrocarbon recovery and maximising collaboration across the Industry.
BEIS (formerly DECC) should create a new independent body, responsible for operational regulation of the UKCS, focused on supervising the licensing process and maximising economic recovery of the UK’s oil and gas reserves in the short, medium and long terms.
- The new body should take additional powers to facilitate implementation of MER UK.
To underpin delivery of the new MER UK strategy, Government should fully utilise its existing powers and take a series of additional powers and sanctions, for example establishing a clear system of (private) informal and (public) formal warnings which could ultimately lead to the loss of operatorship and then license.
- Develop and implement important Sector Strategies.
The new body should work with Industry to develop and implement the six sector strategies outlined in the Wood Review (covering exploration, asset stewardship, regional development, infrastructure, technology and decommissioning), along with suggested actions.
In July 2014, the Government published its response to the Wood Review, it accepted all of the Review’s recommendations and provided further detail on its commitment to fully implement them.