Wood Review Implementation Call for Evidence

Overview

This consultation was carried out by the Department of Energy and Climate Change. In July 2016, the department merged with the Department for Business and Innovation and Skills to form the Department for Business, Energy and Industrial Strategy.

In June 2013 the Secretary of State for Energy and Climate Change, Edward Davey, tasked Sir Ian Wood to conduct an independently-led review of UK Continental Shelf (UKCS) oil and gas recovery. The UK’s oil and gas sector makes a substantial contribution to the economy, supporting around 450,000 jobs, and supplies the UK with more than half of the oil and gas we use. It is vital, both for Britain’s energy security and long-term economic outlook, that steps are taken to maximise the economic recovery of our indigenous hydrocarbon reserves.

Sir Ian published the Wood Review in February 2014.  The Review made four main recommendations to maximise economic recovery from the UKCS:

• Government and Industry should develop and commit to a new strategy for Maximising Economic Recovery from the UKCS (MER UK);
• Stewardship of the UKCS should move to a new better resourced arm’s length body, funded by Industry;
• The body should be provided with additional powers to implement MER UK; and
• The new body should work with Industry to develop and implement new sector strategies, such as on exploration and decommissioning cost reduction.

Government welcomed and accepted his report and recommendations and has made significant progress in taking forward work on the main recommendations as follows:

• The Government has formed an Interim Advisory Panel, chaired by Sir Ian Wood and attended by industry and Government representatives. The Panel, which has met several times, has a role in advising on Wood Review implementation.
• In July, the Government published its formal response to the review, setting out the proposed approach to implementing the review’s recommendations.  There are two key strands to this: establishing the OGA in law, as the successor to DECC, with the appropriate objectives, duties, powers and functions; and taking practical steps to get the OGA up and running as quickly as possible.
• The final corporate structure of the new regulatory body has been determined. The Oil and Gas Authority (OGA) will be a Government Company (GovCo), headquartered in Aberdeen with a significant presence in London. The OGA will be established in Spring 2015, initially as an Executive Agency (EA) which, subject to the next Government’s legislative programme and the approval of Parliament, will then transition to a GovCo by summer 2016.
• A CEO to lead and shape the OGA has been appointed. We will also shortly launch a recruitment competition for the chair of the OGA.  The chair will subsequently lead the process of bringing together the OGA’s board.
• The first part of putting the OGA on a legal footing has been initiated by the introduction into the Infrastructure Bill in July 2014 of clauses, which give the Secretary of State a duty, in consultation with industry, to publish a strategy for the achievement of MER UK and providing the Secretary of State with a power to raise a levy to provide stable funding for the OGA.  The Infrastructure Bill is expected to pass into law next year. 
• DECC is now in the early stages of work to prepare a bill for the first session of the new Parliament in 2015 (first session Bill), which will complete the establishment of the OGA as a fully arms’-length steward and regulator of the UK’s oil and gas reserves.  This involves developing and defining the objectives, duties, powers and functions that the new body will need in line with the Wood review recommendations and ensuring the smooth transfer of functions from DECC.  The passage of any future legislation will be a matter for the Government of the day to determine, but DECC’s objective is to have a draft first session bill, consulted on and ready for introduction very early in the new Parliament’s programme.  This call for evidence is a key part of the preparation for this legislation.

Why your views matter

To ensure the Oil and Gas Authority is a competent and influential body we will need to provide it with the tools and capabilities to make effective decisions, and to influence the oil and gas sector in order to implement MER UK (Maximising Economic Recovery) effectively. We are, therefore, publishing this call for evidence to engage with, and give all relevant and interested, parties an opportunity to support our policy making by providing views and evidence as to how the Wood Review recommendations should be implemented.

This call for evidence is a key part of the preparation for new legislation, and is a vital part of ensuring we implement the Wood Review recommendations, and establish the OGA in the most practical and effective way possible.

It’s another key milestone in progressing with Sir Ian’s recommendations. Sir Ian Wood’s work highlighted the very real benefits for the UK of maximising economic recovery in the UKCS – we are determined to realise these benefits.

What happens next

This Call for Evidence closes on 31 December. We will analyse the responses and publish a formal response in early 2015.