Who would be in control?
The simple answer is the Scottish Government but external influences would be significant. “It’s Scotland’s Oil” proved an emotive SNP slogan in the 1970s[i] but in today’s debate, the Scottish Government recognises the importance of stability. To encourage continued investment, it proposes to engage with industry and to honour existing licences post-independence.[ii] As more participants enter and as decommissioning commences, DECC and the HSE already find their resources strained.[iii] Furthermore, Sir Ian Wood’s report recommended a new regulator with greater powers to ensure Maximum Economic Recovery (MER).[iv] New Scottish regulatory bodies would therefore inherit a significant workload although industry would expect a seamless transition. The Scottish Government proposes a new regulator (based in Aberdeen and Glasgow)[v] although resourcing such a body may prove challenging.
UPDATE (December 2014): Refer to ‘2. Oil’: the new Oil & Gas Authority (OGA) is due to commence activities in early 2015.
Following recent acquisitions (Nexen-CNOOC,[vi] Talisman-Sinopec[vii]), China controls 10% of UKCS production, including the prolific Buzzard field;[viii] aside from profits disappearing abroad, concerns have been expressed over external political influence. Investment decisions by multi-nationals, comparing projects across their global portfolios, could have a major impact on Scotland. Government intervention brought resolution to the recent Ineos Grangemouth dispute.[ix] Post-independence, such infrastructure would become even more critical; industrial action, unplanned outages (e.g. at critical hubs[x] and major fields[xi]) or severe weather could disrupt the national economy.
Ageing infrastructure and a hostile environment keep UKCS production costs high.[xii] Offshore technology was pioneered in the North Sea[xiii] and skilled professionals once again have a vital role, this time to support field-life extension. Subsea technology has already unlocked marginal prospects as tie-backs; new advances are required to meet the Scottish Government aim of increased recovery from maturing reservoirs.[xiv]