From Concrete to Code to Collaboration: Reimagining North Sea Operations

The dust has settled on the budget.? The summary from the Upstream industry seems to be – bad, but could have been worse.

Bad from industry’s point of view is an extension and increase of the Energy Profits Levy (EPL).? Increased to 38% and extended to 31 March 2030.? That means the headline rate of tax on Upstream petroleum is 78% - amongst the highest in the world.? Capital relief on the EPL has also been removed.

Good – because some capital allowances remain and the government has committed to a consultation which will define the scheme to replace the EPL.? This should happen in 2025.

Context and Historical Perspective

In 2022, Supermajors reported adjusted earnings exceeding US$220 billion, while European nations struggled with gas prices increasing ten-fold. The North Sea, long associated with "oil wealth" in British consciousness, became an obvious revenue source to address the crisis. This led to the EPL's introduction, reinforcing the UK's reputation for fiscal volatility.

The Labour government was transparent about its intentions to maintain the EPL and revise allowances.? Industry watchers weren’t surprised by the result.? There’s no doubt that an increase in government share from around one-third to four-fifths of revenues will take a toll on confidence and investment.

A Challenge to the Industry

I would like to offer a challenge to all of us involved in the UK North Sea though.? Can we look ourselves in the mirror and say that we’ve done our best?? In 2023 we lost 100mmboe in poor plant performance alone.? That’s US$7.5B in revenue.? Around US$2B of company share that stayed in the ground.

For decades we’ve relied on the commodities cycle to ride to the rescue.? Poor performing assets would enjoy the anticipated price spike – like we saw in 2006-2008, 2010-2014, 2018, 2021-2024.? At the same time there was always the government, the regulator, OPEC, shale gas, someone else we could blame.

This is an industry that has done remarkable things.? That can do remarkable things.? I want to see this next phase – the swan song of conventional North Sea oil & gas – be our most remarkable era.? Let’s make this a moment where we show to the world what an outstanding industry we can be – delivering for the people of our country and for our shareholders.? The technology is here.? The assets are still there.? It just needs the willingness and the courage to do things differently.

The Path Forward: Collaboration, Data and AI Innovation

To achieve this transformation, let’s revolutionise our operational approach – because (and you’ll recognise this Tom Brian , Maisa Monteiro Da Cunha , Eleanor Melvin , Shraddha Shekar-Smith , Natalya Katsap , Jordy de Boer , Pedro Santos , Jeppe Nygaard , David Wood , Nick Whiting and the whole DAF crew) if all you ever do is all you’ve ever done, all you’ll ever get is all you’ve ever got.

What does “revolutionising our operational approach” (such an easy thing to type – such a hard thing to do) really mean?

It means stopping the habit of isolated innovation and embracing actual collaboration.? It means breaking down the barriers that have kept our data, our learnings, and our opportunities locked in silos. ?Within and between our companies.

Let's consider five specific areas where collaboration could transform our industry's performance, extend field life, and accelerate our journey to net zero.

1. Integrated Infrastructure Management & Production Optimisation

By breaking down operational silos, might we see 5-10% production efficiency improvement across the basin, reduced opex, and significantly improved infrastructure reliability?

The North Sea has one of the world's most complex networks of interconnected infrastructure, with multiple Operators depending on each other's assets and third party infrastructure. ?Moving from manual coordination to automated, data-driven optimisation could unlock billions in value.

Key Elements:

• Replace manual control room communications with automated data sharing
• Create a shared digital twin of the North Sea infrastructure network
• Implement AI-driven production forecasting incorporating: Weather data, Equipment status, Infrastructure availability, Market prices, Processing capacity
• Enable dynamic optimisation across operator boundaries
• Develop automated well testing and allocation systems

2. Unified Equipment Performance & Reliability

Can we reduce maintenance costs by 20-30% while improving equipment reliability and reducing unplanned downtime?

Every operator faces similar equipment challenges, yet we learn these lessons in isolation. ?Creating a shared understanding of equipment performance could supercharge reliability and maintenance.

Key Elements:

• Build an anonymous equipment performance benchmarking cloud database covering: Rotating equipment, Static equipment, Subsea systems, Process systems
• Develop shared AI models for: Failure prediction, Maintenance optimisation, Performance optimisation
• Create common standards for equipment monitoring and data collection
• Enable collaborative maintenance scheduling across operators

3. Supply Chain Revolution

Could we reduce supply chain costs by 15-25% while improving material availability and reducing emergency logistics requirements?

In 2020 Amazon used machine learning and AI to save $1.6 billion in transportation and logistics costs. ?Almost all of us would agree that the current supply chain model is fragmented and inefficient. ?A collaborative approach could transform both cost and reliability.

Key Elements:

• Create open data systems between operators and suppliers
• Enable predictive parts management across the basin
• Develop shared logistics optimisation including: Vessel movements, Helicopter scheduling, Port operations, Warehouse management
• Implement automated supplier performance analytics
• Enable real-time inventory visibility across operators

4. Environmental Performance & Energy Integration

Could we accelerate emissions reduction by 5-10 years while reducing the cost of the energy transition by 30-40%?

Meeting net zero targets is a challenge we are all facing – one that collaboration will help us meet. ?Shared data and systems could secure the transition while maintaining efficient operations and ensuring our social license to operate.

Key Elements:

• Create basin-wide emissions monitoring and optimisation
• Enable integrated power management across assets
• Develop shared renewable energy integration strategies
• Build common carbon capture and storage optimisation models
• Implement collaborative flare and vent reduction programs

5. Next Generation Innovation Platform

Imagine technology deployment time was reduced by 50-70% while significantly increasing the success rate of new innovations?

To attract and retain talent while accelerating innovation, we need to create an open ecosystem for development and collaboration.

Key Elements:

• Create standardised data platforms accessible to: Universities, Start-ups, Technology companies, Operators, Service companies
• Develop shared testing and validation environments
• Double down on the work of the NZTC to boost rapid deployment of new technologies across multiple operators
• Build common standards for: Data quality, API interfaces, Security protocols, Performance measurement, Data models

Learning from Other Industries

The financial sector's embrace of open banking has revolutionised services, improved competition, and enhanced customer experience. ?With over six million people now using open banking services, it demonstrates the power of collaborative innovation.? Traditional banks that delayed their response found themselves forced to spend massively to catch up - JP Morgan announced a $12 billion technology investment in 2022, while HSBC a $6 billion spend on digital transformation in 2022.? It might not be enough to beat the FinTechs.

The aerospace industry has pioneered anonymous safety reporting and data sharing. ?100,000 safety reports are submitted through NASA's Aviation Safety Reporting System every year, and the Aviation Safety Information Analysis and Sharing (ASIAS) program connects over 250 aviation organizations.? Airlines that initially resisted sharing operational data found themselves compelled to join after the dramatic improvements to safety - the U.S. commercial fatal accident rate has dropped by 60% in the last two decades. ?In 2023 there were no fatalities involving western-made commercial jets.

Conclusion

The open banking revolution shows us what's possible when an industry commits to collaboration.? Six million customers now enjoy better services, increased competition, and enhanced transparency.? Safety is a core value for almost every energy companies – but we can’t boast the same standards as aviation.? Our opportunity is enormous.? We’re not just talking about banking apps – we're talking about securing critical energy supplies, accelerating the energy transition, and maximising the economic recovery (remember that?) of national resources that belong to all of us.

The North Sea has always been a proving ground for innovation.? From the concrete deepwater structures of the 1970s to the subsea technologies of the 1990s, we've shown the world what's possible when we push boundaries.? Now it's time to pioneer again – not with steel and concrete, but with data and collaboration.

The choice is clear.? We can continue to work in isolation, hoping for price cycles to rescue underperforming assets.? Or we can embrace this moment to transform our industry through genuine collaboration.? The technology is ready.? The opportunities are clear.? The potential value is enormous.? What's needed now is the courage to move first, to share first, to trust first.

This next chapter of North Sea development – our 'swan song' – doesn't need to be a slow decline.? Instead, it could be our finest hour.? A demonstration of how a mature basin can reinvent itself.? A blueprint for how an industry can simultaneously maximise economic recovery and accelerate the energy transition.? A proof point for the power of genuine collaboration and showing the way for the new technologies like CCUS, offshore wind, small modular nuclear, that will inherit our legacy of supplying safe, affordable energy to the UK.

The 78% tax rate isn't going to change until 2030.? The price cycles will always be with us.? But what we can change is how we work together.? The future of our industry – and our ability to continue serving the nation's needs – depends not on external factors, but on our willingness to transform.? The opportunity is here.? The time is now.? Let's make this next phase – maybe our last phase – our most remarkable yet.

What do you think?? Can a different approach to data and collaboration help? ?Is it too late?? Please share your thoughts - especially if you've seen success stories from other industries we could learn from.

[Written by me. Edited by claude.ai]