Intelligence brief: North Sea operators get billion-pound tax relief; Value of digital technologies recognized
Upstream oil and gas news you need to know
North Sea operators get billion-pound tax relief
Operators will save a combined £1.01 billion ($1.43 billion) from the UK Government’s decision to abolish the 35% petroleum revenue tax and reduce a supplementary charge from 20% to 10%, according to the government’s official estimate.
The government’s 2016 budget included several other measures to assist the embattled offshore oil and gas industry, including incentives to encourage investment in key infrastructure. It promised to work with the Oil and Gas Authority to explore whether decommissioning tax relief could better encourage transfers of late-life assets.
Oil & Gas UK welcomed the announcement. It said the measures included in the budget would reduce the headline rate of tax paid on UK oil and gas production from 50-67.5% to 40% across all fields.
The petroleum revenue tax was a tax on the profits from oil and gas production from fields approved before March 1993. The rate was due to drop from 50% in 2015 to 35% in 2016; with the update, companies pay no tax on profits from January 1, 2016.
The supplementary charge and a separate tax - the ring-fence corporation tax – are charges on ring-fence profits. The ring fence prevents taxable profits from oil and gas extraction being reduced by losses from other activities or by excessive interest payments.
Most operators see value in digital technologies
Most upstream oil and gas companies are investing or planning to invest significant funds in digital technologies, a survey by Accenture and Microsoft has found.
Over the next three to five years, four out of every five companies plan to spend the same (30%), more (36%) or significantly more (14%) on digital technologies as they do now, the survey found.
More than half (53%) of respondents said digital was already adding significant value to their businesses. The top areas of investment were: mobile (57% of respondents, up from 49% last year); Internet of Things (IoT: 44%, up from 25%); and the cloud (38%, up from 8%). Big data and analytics, IoT and mobile are expected to attract the most interest over the next three to five years.
Although 66% of respondents identified analytics as one of the most important capabilities for transforming their company, only 13% felt their firm’s analytical capabilities were mature. Almost two-thirds of companies plan to implement more analytic capabilities in the next three years to help address this need.
Respondents also reported that making faster and better decisions was the greatest benefit digital technologies can deliver. A lack of clear strategy or business case – rather than the technology itself – was named one of the biggest barriers to realizing value.
Real-time data in deepwater completion an industry first
XACT Downhole Telemetry provided real-time downhole data during a deepwater completion installation wiith BP in the Gulf of Mexico, in what it is claiming as an industry first.
BP successfully accessed real-time downhole data throughout the well’s completion, using XACT’s acoustic telemetry network, which was seamlessly integrated into the operation, according to XACT.
Six downhole measurement nodes from XACT spanned the 22,700-foot (6,919m) well, enabling BP to monitor critical parameters including downhole weight on the crossover tool, and pressures and temperatures during the well’s completion, it said.
XACT has worked with BP’s Upstream Technology group to further develop and deploy the acoustic telemetry network. BP has provided investment funding to XACT through BP Ventures.