Opinion

Opinion

Opinion: The challenge of a secure power supply

12/03/2015

Recent weeks have seen much focus on whether Scotland will have the right balance of generation to keep the lights on as some of its older power stations start to close. There is, rightly, an intense scrutiny of the system’s capacity to ensure that electricity supplies are secure.

Opinion

Opinion: A new approach to value engineering

10/03/2015

In the current economic climate, operators know they need to realise their reserves more efficiently than ever before within new budget boundaries. They need to change the way they have traditionally worked.

Americas

Is the US shale boom over?

10/03/2015

The biggest slowdown in oil drilling on record is showing signs of reining in the US shale boom. American shale oil output is expected to post the slowest growth in more than four years in April, the country's Energy Information Administration (EIA) said.

Opinion

Opinion: Resilience is key for the oil and gas industry and its achievements

10/03/2015

There is no denying that the UK oil and gas industry is in the throes of a difficult year. The sudden and unexpected drop in oil prices has resulted in very difficult times for all UK continental shelf (UKCS)-related projects, creating uncertainty for North Sea operators, service companies and all those who work in the supply chain.

Opinion

Opinion: The key emerging technologies for oil and gas

09/03/2015

When emerging technologies and key trends are discussed there is a vast array of suggestions made and debated. They range from wearable technology, 3D printing, bio-computers, through to the "internet of things" and many more.

Opinion

Opinion: North Sea taxation – an ever changing fiscal-shape

06/03/2015

As the UK offshore industry anxiously awaits news from the Treasury regarding changes to the North Sea fiscal regime, let’s look at the historical context of a province where frequent change has been the norm. I write as a result of discussions with industry tax expert Phil Greatrex, MD of CWEnergy. Phil has been kind enough over many years to teach high level petroleum taxation at our annual UK Oil and Gas Law teaching week for CEPMLP of Dundee University. The special regime for North Sea taxation was first introduced in 1975, just as the first big offshore fields were coming on-stream.

Opinion

Opinion: Reaping rewards from standardised ways of working

06/03/2015

Since the days of Henry Ford and the beginning of mass production, the benefits of ‘standardisation’ have been widely promoted and publicised. The automotive industry spear-headed standardisation and, with it, transformed manufacturing practice forever. The rationale for standardisation is as compelling as it is simple – we know full well that variation is more likely to cause errors, increase complexity and therefore impact everything from safety to operating costs. The oil and gas industry has been slower than many to adopt standardisation to the same extent, although some operators have been better than others at embracing the concept. Generally, the industry is still behind the curve. Nowhere is this more evident than offshore when comparing ‘ways of working’ across different shifts where it is not unusual to see a marked change in how things get done with the arrival of a new crew.

Opinion

Opinion: The new era of transformation in energy

05/03/2015

What a difference a year makes. Twelve months ago the shale revolution in the US was changing everything, from manufacturing competitiveness to traditional import/export flows and even longstanding geopolitical arrangements this side of the pond, shale exploration was pretty much on each EU country’s agenda, with shale gas often seen as the only way out of Russian dependency. Now we are in the middle of another quantum shift which is transforming everything again. Crude prices have plunged, Russia is in recession, experts are declaring shale investments dead in the water (too soon in my view) and government policies favouring renewables are under new scrutiny, as economics suddenly favour dirtier coal and gas. Whether you blame technology, politics, softening demand or a mix of all three, these ructions are testament to the dynamic nature of energy markets and the huge risks that emerge in a period of profound volatility.

Opinion

Opinion: It’s time for a bath!

04/03/2015

When speaking to different stakeholders in the industry, there is one common theme. Recovery. Everyone is talking about it. Rhetorical questions are constantly posed – when does the oil price recover, when do we see increases in capex again, when will we have equilibrium in the drilling market? Such optimism is admirable, but is it misplaced? As in previous recessions we are also seeing a number of letters of the alphabet being quoted. “Is this a V- or a U-shaped recovery?” Different stakeholders have varying opinions. Earlier in the year there was much more talk around a V-shaped trough on the basis that “oil prices just can’t be this low for too long”.

Opinion

Opinion: West of the Hebrides oil & gas industry pipe dream

04/03/2015

By and large, the UKCS oil & gas story has been one of success. However, this has not been the case in the waters west of the Scottish mainland and the Hebrides. Rather, it has been one of disappointment and, unlike bustling Shetland, somehow oddly remote from Aberdeen. Scotland’s west coast has always had a slightly arms length relationship with the oil & industry – intimately involved at some levels but never the front line in terms of activity or economic impacts. It was not always expected to remain that way. I remember, almost 40 years ago, attending explanatory meetings in Stornoway and elsewhere at which oil industry executives talked confidently about the industry’s expansion to waters west of the Hebrides. It was not a case of “if?” but “when?” which explains why that expectation has never quite gone away even though it has rarely seemed close to being fulfilled.

Opinion

Opinion: UK explorers must embrace high-impact plays or face further declines

03/03/2015

UK oil and gas explorers face some very difficult trends that threaten the long term future of the North Sea. Wells are simply not finding enough new resources. These problems set in long before the recent oil price declines and will not be easily resolved if and when oil prices recover. Explorers need to adopt bold new strategies if they are to address the fundamental issue of small discovery volumes. Lack of investment is not the issue. Over five years to 2013, the UK industry spent US$13.9 billion on exploration and appraisal work.

Opinion

ITF Showcase 2015: The next frontier – sensing opportunity in subsea processing

03/03/2015

The offshore oil and gas industry is reaching an inflection point. As the oil reserves in shallow waters reach the end of their production lives, operators must take the long view and drill in deeper waters to find new recoverable resources. Doing this economically presents some significant challenges – a feat which will require serious innovation if firms which grew up with the North Sea are to successfully export their skills. Using conventional methods is not an option – it’s simply not feasible to place a production rig above a well in water that’s thousands of metres deep. For that reason, the industry is thinking differently about how it works and how it uses technology.

Opinion

Opinion: Former Prime Minister Gordon Brown says North Sea oil is in need of rescue plan

03/03/2015

Scotland has benefited enormously from the huge oil wealth produced by the people of Aberdeen and the north-east. Over 40 years, 42billion barrels have been taken out of the North Sea by an oil industry that worked out of Aberdeen and Peterhead. And over many years in visits to Aberdeenshire to see my parents, or simply to visit the industry, I have seen how the skills developed in the north-east have boosted the British economy and kept the country ticking through thick and thin – and in decade after decade – since oil was first discovered. Over 30 years oil, has averaged around 17% of the Scottish economy. But now in a year when oil prices have fallen 40%, we face what is more than a normal trough in the oil production cycle as some of the industry’s great experts, Sir Ian Wood and Lord Browne, formerly of BP, have recently reminded us. The fall in world oil prices comes at a time when extracting oil from the North Sea is more challenging than ever and has brought us, earlier than we could have expected, near to a tipping point for the industry.

Opinion

ITF Showcase 2015: Guest editor Dr Patrick O’Brien, chief executive of ITF, calls for collaboration

02/03/2015

Oil and gas joint industry projects have made a significant contribution to technological progress over many decades, but as an industry we need to be more strategic to maximise UK production in the years ahead. Collaboration is the great buzz word of the moment and was a key theme of the Wood Review. It has been at the heart of what we do at ITF since we launched in 1999, at a time of low oil prices and operating challenges. A focus on collaborative efforts to get technology qualified, trialed and implemented in the field is particularly important for the industry at this time.

Opinion

Opinion: City Deal – Where’s the Real Vision?

The “City Deal” being proposed for Aberdeen apparently consists of spending a massive £2billion on transport, housing and skills development. If such a deal is ever approved then Aberdeen City Council officials claim this will go a long way towards helping revive the oil & gas industry, the health of which is most certainly a cause for concern as would be the health of the entire economy of Aberdeen and Shire should there be a really prolonged downturn in North Sea and international activity. To put it bluntly though, such claims are utter nonsense and should be taken with a large pinch of salt. Investment in infrastructure does not itself impact directly on the economic or industrial prospects of a City or indeed a country. Why? Because infrastructure can only act as a means of attracting private sector or joint private and public sector investment in companies, jobs, technology and so on and so forth.

Opinion

Opinion: Reflections about the Granite City

It is hard to believe that the North Sea oil & gas industry has been a part of the Aberdeen and north-east Scottish economy for half a century. From early tentative beginnings starting with Shell renting yard space in Torry and offices on Market Street it has become the linchpin and more besides for this city-region. Take oil out of the equation and our economy would collapse. There is no obvious sunrise successor, though maritime renewables could be made to work, if the oil & gas supply chain goes after the opportunity and Donald Trump is trumped over the European Offshore Wind Deployment Centre project. But really grabbing that opportunity is something it has been poor at, despite the efforts of Aberdeen Renewable Energy Group and the launching at the turn of the millennium of what became the very successful All-Energy show, but which was last year swiped by Glasgow in a manner that angers me still.

Opinion

Opinion: The safety disco

27/02/2015

Cast your mind back to your awkward teenage years and your first school disco; that uncomfortable rite of passage with boys on one side and girls on the other. It took insurmountable courage for someone to dig deep, walk across no-man’s land and ask someone to dance to the latest single from Wham. Too often, nobody stepped up to challenge the accepted tradition, despite perhaps wanting to. The situation was left to the bravery of two poor teachers who unashamedly put their best foot forward and eventually encouraged others to do the same. Fast forward to now. Our industry is at the unpredictable mercy of our economic circumstances and our collective efforts. It is standard practice to do anything that will prove our individual worth and value. Take, for example, our safety standards and guidance.

Opinion

Opinion: Investing in future talent

27/02/2015

We've all read plenty of stories predicting the future of the oil industry, with endless questions like: What will the oil price be in six months? Will we receive a tax cut as an industry in the imminent budget announcement? When Will OPEC reduce production to reduce the surplus supply of oil and gas? So it may seem strange timing to talk about recruitment and investing in the future with universal cuts - but this is key to securing the industry for generations to come. The most frustrating factor of these unanswered questions is that we have very little control over the outcomes. For many, it is a tough and trying time as leaders have very little choice but to say farewell to long-serving staff in order to reduce their cost base. Having witnessed a dip in the industry before, one thing that always astounds me is how the cycles of recession and talent wars continue.

Opinion

Opinion: Low oil prices – Groundhog Day?

26/02/2015

It's cold out there, it's always cold out there.... It seems like we are getting news of rate cuts and job threats every day at present. Our politicians seem to be on an endless loop exhorting collaboration, listening, unity and focus. Fans of the cult film Groundhog Day will be able to relate to Phil Connors in all of this. In that 1990’s classic our hero was repeating Groundhog Day over and over again. For the record, our much heralded Aberdeen Summit was held on Groundhog Day (2nd February).

Opinion

Opinion: Industry will rise to the challenge

24/02/2015

Continually increasing costs, a sharp fall in the price of oil, a collapse in exploration and a slump in investment. You could be forgiven for thinking the end is nigh for the UK oil and gas industry. It is true that the main findings of our Activity Survey 2015 don’t make happy reading and risk giving credence to the doomsayers’ views that there is very little left to play for, that our industry is in decline and should be left to do just that.

Opinion

Opinion: One reason this oil bust may be different

18/02/2015

BP chief executive Bob Dudley recently issued a dire warning, comparing the current oil bust to the one that devastated the oil and gas industry in the 1980s. I’ve made similar comparisons between the current price plunge and the ‘80s. The severity of the price decline during the past six months certainly reinforces the notion that we may be seeing the worst oil slump in 30 years. Other factors, though, occurring on the fringes of the oil market, hint at a different outcome than the 80s, which ended with the US becoming more dependent on cheap oil.

Opinion

Opinion: Shell’s Brent Delta activity shows we are on right path

07/02/2015

By unveiling phase one of its plans for the Brent Delta this week, Shell has certainly propelled decommissioning into the headlines and consciousness of everyone, whether they’re directly involved with oil and gas or otherwise. By its very nature, North Sea decommissioning is a developing business that is new to many, and misinterpreted by even more. It’s important right now to make it clear that it is not about the premature closure of the North Sea oil and gas industry. In reality, decommissioning is a developing sector that is full of opportunity; the opportunity to win business and opportunities to problem-solve through innovation.

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