1. 1 Paul Dymond Operations Director Oil & Gas UK The Future of the Oil and Gas Sector in the North Sea North Sea Stakeholder Conference Working together to manage the marine resource of the North Sea Region 18 th March 2010

2. 2 Who we are… The leading representative body for the UK offshore oil and gas industry Working to promote and strengthen the long-term health of the Industry We represent operators, non-operators, contractors and suppliers & speak for the whole sector

3. 3 Providing secure energy supplies: Produced > 900 million barrels oil and gas equivalent in 2009 Supplying 2/3 rd UK’s primary energy needs Meeting 97% UK oil demand and 73% UK gas demand A major investor in the UK economy £ 1.0 billion invested in exploration in 2009 £ 4.7 billion invested in new developments in 2009 £ 6.6 billion spent on production operations in 2009 A major employer: 450,000 jobs supported across the UK Benefiting UK balance of payments: £ 30 billion better off in 2009 from the UKCS Major Source of Tax Revenue: Direct North Sea taxes £12.9 billion in fiscal year 2008/9 Paid 28% of total UK Corporation Tax, CT Oil field tax rates between 50 & 75% Supply chain provides further £5 - 6 billion in payroll / CT Global hub exporting oilfield goods and services: £6 billion per annum export business – world leader in high-tech engineering and offshore energy services e.g. sub-sea systems Economic Importance of the UK Oil and Gas Industry - today

4. 4 Contribution of indigenous European production to security of energy supply Overall the EEA is the 4th largest oil and gas producer in the world – ahead of e.g. Iran, Algeria and Canada; Indigenous EEA/EU production is an important contributor to EU security of energy supply; Approx. 90 % of EU reserves are located offshore. Source: BP Statistical Review, 2008 + Dutch MEA 0123 RO DK IT UK N Million barrels per day Consumption Production 020406080100 PL DK RO IT DE NL UK N Billion cubic metres Consumption Production

5. 5 Remaining UKCS reserves: Produced 39 billion boe of oil and gas to-date Up to 25 billion boe still to be recovered

6. 6 UKCS Investment Outlook SectorEstimated Value Added (€ million) Oil and Gas41,822 Shipping5, 498 Offshore Wind 70 Fishing511 Source: Policy Research Corporation Draft report, 2010 UK Investment comparison to 2020: Offshore wind aspiration: ca £100bn Oil & Gas plans: £60bn

7. 7 Future world demand for energy – continuing importance of oil and gas Global demand for energy is increasing steadily; Wind, solar and bio-fuels expanding rapidly: but from a very small initial base; Oil and gas will remain the primary energy source for many years to come; In the UK, even as we head towards a low carbon economy, oil and gas will account for 70 % of our primary energy needs in 2020. Source: ExxonMobil 2008

8. 8 EU demand outlook - reference scenario Oil and gas will remain the primary energy source for many years to come; Oil remains the key feedstock for the materials needed in modern life – “its not just about energy” Oil demand expected to remain around 13mbd, slightly falling to around 10mbd towards 2030; Gas demand expected to rise by about 17.5% from 2007 and 2030.

9. 9 The future of the UKCS – a tale of two possible futures… The challenge is to keep the UKCS competitive to secure investment funding in a global market place £10bn ongoing investment Requires further £50bn investment

10. 10 Health & Safety in UK Offshore Oil and Gas Hydrocarbon Releases (1997-2009) Incident: Piper Alpha Outcome: Lord Cullen Enquiry: 106 recommendati ons made Incident: April 1 st Super Puma crash Outcome: Setup of the Helicopter Task Group to drive the helicopter safety agenda Incident: Sumburgh Chinook Crash Outcome: Chinooks withdrawn from offshore use Key Events Injury Trend (1995-2009) 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 New Offshore Safety Regulations Step Change in Safety Initiative HSE’s KP3 Programme

11. 11 Example of changes in operational procedures that have produced environmental benefits As a result, a measurable improvement in the quality of the marine environment. OSPAR Decisions and Recommendations & EU Directives incorporated into UK legislation Company’s Environmental Management Systems Safeguards focus on minimising risk to the environment

12. 12 SFFNFFO Oil & Gas UK FLTC Services FLTC Un-attributable Compensation Fund KIS-UKCSFishSAFEWebsites FLTC established to manage interactions between two industries and endowment fund Funding to redress Skippers for loss or damage to fishing gear caused by oil- related debris Subsidiary FLTC Services Limited to supply information and devices that enhance safety The sharing of common waters between two industries requires good working relationships and attention to potential interactions, especially with respect to safety The UK oil and gas industry, through Oil & Gas UK, has taken positive steps to develop methods and systems that allow both industries to work safely and efficiently together and to promote harmonious working relations The UK oil and gas industry, through Oil & Gas UK, has taken positive steps to develop methods and systems that allow both industries to work safely and efficiently together and to promote harmonious working relations

13. 13 Southern North Sea Petroleum Production Licences Overlap with Round 3 windfarm lease zones A case for spacial planning, good working relationships and meaningful consultation.

14. 14 EU Marine Spatial Planning – The Oil & Gas Industry’s View 1.Must continue to allow access for E&P activities and promote recovery of new hydrocarbon resources; 2.Should recognise the oil and gas industry's economic and social contribution; 3.Must fit with other EU energy policy goals (i.e. oil and gas industry's contribution to secure energy supplies); 4.ONLY required where conflicts arise - oil and gas industry actively maintains good relationships with other sea users; 5.Should be the responsibility of Member States; 6.Must take account of possible future technology developments and any proposals must be subject to a thorough stakeholder consultation process.