In June 2013 I took the opportunity to commission Sir Ian Wood to undertake a comprehensive review of the regulation and stewardship of the UK’s hydrocarbon reserves. The resultant Wood review made recommendations that will refresh the management of the UK continental shelf in a profound way that will benefit both the UK economy as well as the myriad businesses involved in the recovery of oil and gas offshore. Sir Ian’s review estimated an extra 3 billion to 4 billion barrels of oil equivalent could be recovered that otherwise would not be.
In July of this year I published the Government response to the Wood review. The recommendations made by the review were accepted in full and we have been working hard to establish the new regulator, the Oil and Gas Authority (OGA), in time for launch in April 2015. We have brought forward legislation that will set out the principles of maximising economic recovery from the UK territorial sea and the UK continental shelf (MER UK) and provide for a levy making power. We are in the process of recruiting high calibre individuals to staff the OGA, from a chief executive and chair of the board to engineers and geologists to provide additional technical skill and expertise to our licensing, exploration and development team.
This call for evidence, published today brings a special focus on how we can best implement the recommendations contained in the review. We are inviting evidence from all stakeholders that will help us create an effective and efficient regulator with no unforeseen consequences.
In particular, we seek evidence on the establishment of the OGA as a Government company, on the development of the MER UK strategy, on how the new powers of the OGA will be defined and used, on building a robust and proportionate sanctions regime to ensure the success of MER UK and on the new cost recovery regime to fund the OGA.
This exercise will inform our policy development and legislative agenda for the new year and help ensure the OGA will be fully vested to safeguard the economic future of the UK territorial sea and continental shelf.