Extracting reserves from the deep waters off Africa and South America will require great technical skill and the ability to operate securely in demanding conditions. Yet focusing on distant prospects overlooks the enormous frontier potential much closer to home: the North Sea.

The North Sea has already been a remarkable boon to the UK. Over the past four decades, 698 offshore fields have been discovered in the UK Continental Shelf (UKCS), producing some 41bn barrels of oil and gas to date. And yet the Government believes that there is another 20bn barrels – nearly half as much again – still to produce.

The UK energy industry now faces the pressing question of how to make sure this resource is extracted profitably. I believe the responsibility falls on government and regulators to ensure a stable fiscal regime that will allow companies to invest with confidence, and on energy companies to innovate so they can produce the North Sea’s oil and gas at a competitive cost.

Investment in the North Sea over the past 20 years often has been plagued by uncertainty, whether caused by falling prices in the 1990s or rising taxes in the 2000s.

In recent years, the Government has taken positive steps – introducing tax relief for marginal fields and for decommissioning mature fields – to help the UKCS to remain internationally competitive.

This has helped to lift spending in the region from £8.5bn in 2011 to around £13bn this year, and fostered the rich potential of frontier areas such as those west of Shetland.

All international investors in the North Sea have choices about where to spend their money, and at least part of the choice will be based on the consistency of the fiscal regime and the record of the country concerned.

Oil and gas exploration is a very long-term business, with investment decisions taken today needing to stand the test of time decades hence.

So, over the next 50 years, any government that can provide a stable and predictable fiscal environment and policy framework stands to be the beneficiary of that investment.

UK fiscal policy is now more attractive compared to other international basins. The result is that more reserves are becoming commercially viable – 28 projects were submitted to the Government and given approval last year, double the number in 2011.

But there is an important caveat. In other regimes, companies can sign production-sharing agreements with national governments, thereby protecting themselves, to a degree, against any new taxes or policy changes being introduced further down the line.

The UK offers no such agreements. Companies are, therefore, vulnerable to any potential shifts in policy and taxation from future governments.

As the economics of North Sea production become increasingly marginal, this type of field life protection will become increasingly important and the UK will need

to consider introducing it.

As well as achieving the right investment conditions, the industry must make greater strides in developing technology that will both reduce operating costs and recover as much as possible of the UKCS’s remaining reserves.

The North Sea – which has over the course of its existence spearheaded technological advance for the international offshore industry as a whole – must continue to be a crucible for innovation.

If the North Sea is to remain a competitive investment prospect, it needs to achieve a step change in the cost of exploiting its oil and gas reserves.

One area we need to consider more imaginatively is in using technology to improve cost efficiency. This is a field where the Norwegians have done a better job than us in the UK.

A prime example is in the sphere of seismic technology, where Norway is the dominant supplier of much exploration and production software and is in the forefront of subsea processing.

We need to use communications technology, a field in which the UK excels, to design remotely monitored and operated facilities. We have seen companies introduce remote monitoring of drilling operations and as the technology advances, remote management will allow much more efficient use of scarce, skilled resources.

Vehicle manufacturers are predicting driverless cars by 2020, and the variables to be dealt with in driving a car down the road are surely greater than those of an energy production platform.

A second area where the North Sea can achieve significant cost advantage is in improving the recovery factor from subsea fields. The industry is moving more and more towards special-purpose vessels on the ocean floor to avoid the cost of fixed platforms, and reducing the cost of deepwater production. The North Sea is the ideal proving ground for these technologies before deploying them in ultra deepwater basins such as Brazil or the Gulf of Mexico.

Third, high-pressure, high-temperature (HPHT) subsea well systems will be a game-changer in terms of cost and reliability. Using technology from the space and aeronautics industries, they are costly and take time to design and manufacture, but they will come. The North Sea has a real chance to lead in this sphere.

Finally, there is also a need to develop more shared infrastructure. A subsea power grid would be a huge advantage if significant processing capability is moved to the ocean floor. In addition to being more efficient, it provides an opportunity to reduce the overall emissions associated with oil and gas production.

The North Sea still has a powerful role to play in the international energy industry and in the UK’s economic future.

To secure this, we have to be innovative and adapt our technology and operating practices. Failing in this task will accelerate the decline of the basin as an economic proposition. Success will not only prolong the life of the North Sea, but also provide the basis for a competitive offering in many other parts of the world.