There is a sad irony in the fact that the Westminster Parliament, which has benefited in excess of £300 billion in tax revenues from the North Sea should be so reluctant to offer the support needed to protect jobs and preserve a huge contributor to the UK economy.
Last year’s catastrophic drop in the price of crude was followed recently by signs of a ‘respite’, when prices appeared to be levelling out around the $60-$65 mark.
In recent years, the oil and gas industry has had both highs and lows. With prices fluctuating and various market conditions being hit by external forces, there’s no doubt the industry has been a turbulent one.
Given the expectations of greater co-operation and collaboration after the Wood Report and implementation of the maximising economic recovery strategy, the North Sea oil and gas industry must reconsider its approach to resolving disputes.
After a survey conducted by anti-windfarm campaigners revealed the developments were driving visitors away from Scotland, Energy Minister Fergus Ewing explains why he believes turbines and tourism can co-exist. A successful tourism industry is absolutely vital for Scotland's economy. In 2014, there were 15.7 million overseas and domestic visits, up 10% on the previous year, with tourists spending nearly £5billion. As both energy and tourism minister I warmly welcome the great work being done in this area and we will work to ensure this success story continues.
A year is a long time in the oil and gas industry and that has been especially true for the Kingdom of Saudi Arabia (KSA), caught in a maelstrom of geo-political, economic and market factors. In August 2014, Saudi Aramco announced US$40 billion a year of spending for the next 10 years on capital programmes. The year ended with the Saudi government projecting a US$40 billion budget deficit in 2015 and then came last month’s announcement of US$27 billion of bond issues by the end of this year to bolster the national finances even after a string of project cancellations and postponements. Over this period, the country has been locked in a struggle to regain market supremacy over US shale production while dealing with the West’s improving relations with Iran, its regional challenger, a royal succession and a spate of terrorism attacks.
In Texas, there’s an expression for action that comes too late: it’s like closing the barn door after the horses have run away. I found myself thinking of the term as I read the recent indictment of Black Elk Energy Offshore Operations. In this case, the barn is the Gulf of Mexico, where Black Elk operated for years despite regulators’ repeated warnings about safety violations by the company. The horses are Black Elk executives who left the company a year ago and sold off Black Elk’s shallow water operations long before the indictment came down. None of the executives were named in it. The indictment stems from a Nov. 16, 2013 explosion at a Black Elk rig in the shallow waters of the Gulf of Mexico. Three workers died and several others were severely burned, including Renato Dominguez, a maintenance worker assigned to the rig.
A few days ago, while reading my newspaper, I found myself surprisingly absorbed with the further decline of the oil price, but even more with the wave of redundancies announced by major oil and gas companies. A few pages on, in a more interesting for me landscape, I was reading through the major transfers made this summer in the Premier League, when it occurred to me that in fact the two sectors share similar characteristics and that the current football industry could be a forewarning to the current oil crisis.
Do you know what gives me hope for this industry’s future?
Cast your mind back only 12 months, the oil price is sitting at US$107, the scene has been set – the offshore oil industry in the North Sea is finally making a real commitment to its most important asset – people. Major investment in attracting, training and retaining talent is top of the agenda; the industry is making major strides to become the sector of choice for the best and brightest professionals creating a platform for rewarding careers that offered prosperity, stability and security. All the talk in Aberdeen is about skills shortage and the need to hire more and more people. How things change in one short year, the Brent oil price has plummeted and continues to trade sub US$ 50, there is little or no investment in exploration, few major projects have been sanctioned and the operating cost base remains far too high in the North Sea. To compound matters the talent void in the oil business of a year ago has not gone away just because oil prices are low but still the industry is hell bent on destroying the very fragile fabric that remains. 2015 as in previous low oil price eras is generating plenty of noise from all camps on the subject of balancing the need to reduce headcount whilst retaining talent, but looming large for all of us in Aberdeen, the oil capital of Europe, is the real daunting prospect of a 1986 déjà vu when oil prices collapsed. Managerial, technical, professional and offshore workers were unceremoniously jettisoned in huge numbers with dreams and futures in tatters. Young and inexperienced oilfield professionals the first to be cast aside leaving Aberdeen to become a city in severe recession whilst the rest of the UK prospered.
When the Sea Gem rig struck gas off Durham in September 1965 and the North Sea’s potential role as an energy source impinged upon public consciousness, Harold Wilson was Prime Minister, America was digging deeper into the Vietnam War and the Beatles were at number one with Help!
It is six months since the Oil and Gas Authority (OGA) published Call to Action in response to the commission from the Secretary of State for Energy and Climate Change. The report identified the key risks facing the UK oil and gas industry following the sharp decline in global oil prices, the required action from industry, government and the OGA, and early priorities for the new regulator.
The European Commission’s push toward the creation of a European Energy Union, aiming to make energy in Europe more secure, affordable and sustainable, stepped up a gear last month with the release of the ‘Summer Package’ of reforms to existing energy policy initiatives. This latest set of reforms is yet another indication that energy policy-making is increasingly considered as a European policy to be tackled with a coordinated and centralized approach in the EU institutions. Despite plenty of discussion about the UK’s relationship with the European Union since May’s election, the EU’s latest plans for the future of energy mix in Europe have failed to raise attention outside of Brussels.
Those of us of a certain age will remember playing outdoors - often unsupervised for many hours - especially in the summer months.
The constant ebb and flow between investor fear and optimism seems firmly positioned toward the former as we reach the end of the summer. Global equity markets have reversed the gains of earlier in the year in a series of trading sessions which saw a sea of red across dealers’ screens, culminating in what has already been termed ‘Black Monday’. So, what’s causing the fall in equity markets around the world and what should you do if you’re invested or were thinking of investing prior to the recent downturn?
Bob Keiller sends a message on Core Values to Wood Group employees every week. The note below is taken from a message he sent to employees a few weeks ago. Remember the '80s US rock band Van Halen? Ever heard of a clause buried deep in their lengthy touring contract? It stated something like “there should be no brown M&Ms backstage…if found, the band has the right to cancel the concert at full pay without warning.”
Should Shell push ahead with its $70 billion bid for BG in the face of cheaper oil? The tumbling oil price – down by a fifth since the merger was announced in April - has raised fears that Shell shareholders might balk at the 50 percent premium the Anglo-Dutch energy group agreed to pay for its smaller rival. But while the price tag may look bigger today on some metrics, so should the cost savings.
With WTI on the precipice of breaking below $40/bbl, chatter abounds on just how low oil prices can go from here, with some discussing prices in the low $30s, or potentially lower. While this type of price action is not without possibility, Bentek does not believe this is rooted in fundamentals, but rather, would be a short term phenomenon spurred by speculative trade capitulation and/or a brief storage shock. In terms of the former, should the paper losses from traders holding long positions in oil become too difficult to bear, the market has the potential for a short term rout if/when there is a liquidation of positioning.
The past week has seen the UK Government issue a policy statement designed to speed up the planning system for shale gas development, as well as announcing the extent of the 14th Round of Onshore Oil and Gas licences for England.
Decommissioning has been on the oil and gas agenda for many years, although to the majority within the industry it was something not to be concerned about “now”. It would be carried out “mañana”, and by someone else.
Energy Voice has launched an event aimed at ensuring the next generation of industry innovators don’t get lost in translation amid a market downturn. One of the first ports of call should be looking at what companies are spending and where they’re spending it during a crunch. The last economic recession in 2009 led to the slashing of budgets allocated for workplace training within companies. A survey undertaken at the time found that in the private and public sector, 33% and 34% of respondents reported reduced training funding.
So much for “all the above.” President Obama’s “clean power plan” for combatting climate change, unveiled Aug. 3, makes it clear that the U.S. strategy is to plunge head first into renewable energy -- no bridge fuels, no gradual migration to a low-carbon future.
I ask for advice and guidance all the time – I always have. For me, it isn't always about the answers I get, but the way it makes me think differently about the subject. Let me give you an example. In late 2008, many economies were heading toward recession. I had been PSN’s CEO and had never led a business into a downturn before. I wondered who could help and give me some good advice on things to do, things to say, contingency plans to make.
There are a lot of important things related to the number 42. There are 42 US gallons in a barrel of oil. The three best-selling music albums – Michael Jackson’s Thriller, AC/DC’s Back in Black and Pink Floyd’s The Dark Side of the Moon – all last 42 minutes. Buzz Lightyear’s spaceship is called 42. Cricket has 42 laws (apparently!) I’ll leave you to decide which is the most important out of those. According to Douglas Adams’ Hitchhiker’s Guide to the Galaxy, the number 42 is “the answer to the ultimate question of life, the universe and everything!” But for us as an industry, it represents a great division of opinion. Why? Think about it; what does three on/three off, or 21 + 21 equal? 42.