North Sea Chapter of IADC urges politicians to maintain focus to avoid ‘economic adversity’ for UK

Aberdeen 8 March 2023 – Parliamentarians across the UK have been urged to ignore the “political point scoring” which has led to premature calls for the abandonment of the UK’s oil and gas industry.

The call came in a letter from the North Sea Chapter of the International Association of Drilling Contractors (IADC) to members of parliament in London and Edinburgh after the group’s “encouraging” discussions with members of Westminster’s British Offshore Oil and Gas Industry All Party Parliamentary Group about the future of the industry.

In the letter to politicians, the association, which represents more than 800 drilling companies across the globe including 14 contractors and more than 80 associates in the UK Continental Shelf, reaffirmed its position that politicians and the oil and gas industry work together to ensure a long-term, balanced approach to the energy transition.

And the group said more vocal support from policymakers is required urgently to “avoid an imminent economic and energy supply catastrophe on a national scale”, and outlined three key areas required to preserve the oil and gas industry:

•A mature, pragmatic, joined up and long-term approach to our country’s energy provision

•A recognition of the impending energy crisis that the public will face if we do not de-risk investment in the North Sea, but rather kill the golden goose by rhetoric and stifling taxation

•An orderly energy transition over a measured period with tangible goals

Darren Sutherland, Chair of the IADC North Sea Chapter, said: “This letter is not a case of drillers causing fear and alarm in order to protect self-interest. There is a real danger that the UK will be left without the resources and talent to make the energy transition a reality safely, swiftly and securely if we do not sit up and take notice now.

“We were encouraged by our visit to Westminster to speak to the All Party Parliamentary Group, and we left London with a sense of optimism. However, it is crucial that – regardless of political beliefs – everyone acts now, and in the best interests of the United Kingdom, to ensure a secure supply of energy as we make that transition.”

The association had previously voiced its concerns about a migration of drilling rigs and equipment to other basins, reducing the drilling and decommissioning capability in the North Sea.

In its letter to all 779 politicians of all parties, IADC voiced concerns about these rigs – and possibly more – being lost for good.

The letter states: “As the industry body for the Drilling Contractor community, we are particularly concerned about drilling rigs, uniquely designed for the North Sea, leaving our waters unlikely to return.

“Drilling rigs are the ‘tip of the spear’ responsible for drilling the oil and gas wells required to support production. These rigs are also vital to the decommissioning of the hundreds of wells that need to be removed from the UKCS.

“Reduction in the available fleet size will severely hamper all of the above.”

Darren added: “While it will ultimately lead to a reduction in the amount of drilling we undertake in the North Sea, like everyone else, we welcome the development of the renewables sector.

“However, given there are operators already planning to leave the region, or at the very least curtail investment, the importance of the transition taking place in an orderly manner that will protect jobs, the economy and our energy security cannot be stressed enough.”

6th March 2023

Dear Members of Parliament,

For more than 50 years, the UK oil and gas industry has been the bedrock of the nation’s economy, supporting hundreds of thousands of jobs and delivering billions of pounds in taxes to support economic development. We have set global standards for responsible exploration and production as well as leading HSE performance. Most importantly, the British public has been able to rely on secure and uninterrupted energy supplies for lighting, heating and cooking – without fear of blackouts. North Sea oil and gas has indisputably been a key driver in the growth of the UK economy over the past five decades.

Today, the need for an energy transition is clear. Sadly, political point scoring and vociferous flag waving by some are leading to premature calls for the abandonment of our oil and gas industry. However, it is vital, that oil and gas and renewables work together for an orderly transition to take place.

While we welcome the development of the renewables sector, there is a very real and pressing danger that if governments do not support our oil and gas industry during this transition, we risk irreparable damage to supply or indeed losing it forever. There are examples of operators planning to exit the North Sea, reduce their operations and curtail investment due to our tax regime. The chief executive of OEUK has described the industry as “suffering”.

The energy transition requires oil and gas and renewables, not oil and gas or renewables.