A government review will consider how new technology can help exploit the most oil and gas from the country's offshore reserves.
The independent review, announced by Energy and Climate Change Secretary Ed Davey today and chaired by Sir Ian Wood, will look at increasing the production of oil and gas from the UK Continental Shelf.
Wood – who recently retired from the Wood Group, a leading oil services company – will look at increasing investment in exploration as well as the use of up-to-date technology to recover resources from the shelf and possible changes to the licensing regime.
His review, the first in more than 20 years, will provide interim conclusions in the autumn before a full report is published early next year.
In a written ministerial statement to Parliament, Davey said that while more than 40 billion barrels of oil and gas have already been produced from the shelf, there is still a significant amount to be exploited.
He said Wood would not look at changing the tax regime for the industry as there were a number of changes in 2011, but he did say the review's recommendations will be considered when the Treasury makes further policy decisions.
"While investment levels are rising and the near-term prospects for the UK Continental Shelf are strong, it is one of the most mature offshore basins in the world and therefore faces unprecedented challenges that require new thinking," Davey said.
"For example, declining exploration and production rates, ageing infrastructure and declining production efficiency, and the risk of premature decommissioning of key infrastructure all need to be addressed if we are to extract the maximum economic benefit for the UK.
"Government already has an excellent working relationship with the oil and gas industry through our Pilot partnership, which has made significant contributions to addressing some of these challenges over the last decade.
"However, I have come to the view that the challenges we now face are of sufficient importance that they merit a focused, in-depth review. Such a review has not been conducted since the early 1990s when the challenges faced were very different to those we face now.
"Since 2011 there has been a range of changes to the tax regime which industry has welcomed and which has led to significant new investment.
He added: "It is too soon to review the effectiveness of these changes and so this review will focus on other factors such as the licensing regime, optimising use of and extending life of infrastructure, production efficiency, better collaboration across the industry, increasing the exploration effort and maximising the use of enhanced oil recovery techniques.
"It will also look at the current structure, scale and effectiveness of the government stewardship regime in line with the increased technical and commercial complexity of the mature market.
"While the review will not make recommendations on taxation, its conclusions may nevertheless be drawn upon in future tax policy considerations by HM Treasury."
In a press statement, Wood said: "The values involved in UK oil and gas are so large that even modest increases in key production metrics over time will deliver significant economic benefits."