Drilling activity in the North Sea must double over the next 20 years if oil and gas recovery from the UK Continental Shelf is to be maximised.
A new report by business advisory firm Deloitte also said a “cultural shift” was required in the industry if the basin was ever to reach its full potential.
The report, which was collated to gauge reaction to the Wood Review, said the new industry regulator, the Oil and Gas Authority (Oga), the government and firms operating in the region needed to accept and adapt to the North Sea’s ‘new reality’.
Respondents showed strong support for Oga’s introduction with the main concerns raised being the tax environment governing the offshore sector.
Deloitte senior partner Derek Henderson said: “The UK’s oil and gas industry is going through a serious period of transition; its three major stakeholder groups need to change significantly and adapt quickly.
“There must be more collaboration both between and within the groups, with companies working together to make extraction more economically viable and increased coordination between departments at Whitehall.”
The report also found drilling activity on the UKCS needed to double to more than 90 wells per year over the next two decades to make the most of the estimated $1.3 trillion worth of oil and gas which potentially remains.
“Only about a third of the known recoverable resources in the UKCS are left,” Mr Henderson said.
“The ‘easy oil’ days are gone and we need a fiscal regime that is more reflective of the current state of the basin.
“Companies are looking for a tax system which is simple to navigate, stable over the longer-term, incentivises investment and is competitive by international standards.
“Making the right changes could mean billions of pounds of difference to the UKCS, and simultaneously increase the taxable income as more oil and gas is recovered.”
The report’s author said Oga, which it described as a new regulator “with teeth”, had a crucial role to play but said firms also had a responsibility to take the initiative.
Oil and gas consulting partner Geoff Gibbons said: “Industry cannot afford to sit and wait for the regulator to drive change.
“Respondents were quick to point out that many of the measures required have been known for some time and there is strong scepticism that real change will be delivered.”
Meanwhile, EY’s head of oil and gas taxation, Derek Leith, yesterday echoed an earlier Chamber of Commerce call for Chancellor George Osborne to use his Autumn Statement next week to introduce significant fiscal reform for the industry.
“While we realise that wholesale alterations to the current regime cannot be implemented instantaneously, we believe that an immediate reduction in the tax rate is necessary.
“Virtually all new fields granted development consent since 2011 have benefited from some form of field allowance.
“This strongly suggests that the current headline rate is too high for the maturity of the basin.”