It’s bizarre, isn’t it, that the biggest story that came out of Offshore Europe was that visitors who parked on the grass verge on the approach roads were all handed parking tickets? In reality, though, the biggest story from Offshore Europe was that not much happened.
It may well have had a record attendance but, as one of my friends said, this was probably because the attendees didn’t have very much else to do.
Actually, given some recent comments from the US EIA (Energy Information Administration) on investment in new developments, there may well be some truth in that.
What was also very obvious was the lack of new technology. Discussing this with the local boss of a Norwegian outfit over coffee, he said that most of the new stuff he had seen was of an incremental nature rather than anything else.
We agreed that, given the state of the industry, this was perhaps not surprising, because while energy is a long-term industry, the attitude of the IOCs (international oil companies) was still generally very short-term and risk-averse.
So when they next start complaining about the cost of deepwater drilling and other activities, they need to be reminded that it’s their fault and not the fault of the supply chain, which has presented them with plenty of solutions which they simply chose to ignore.
Of course, Government doesn’t help. Reading the recent report on energy security by former energy minister Malcolm Wicks, he helpfully points out how little the UK Government has invested in energy R&D compared with our main industrial competitors.
The investment gap is actually very large. Wicks says that, in 2007-08, “the UK spent a total of £151million on research, development and demonstration of energy technologies, of which £57million supported demonstration”.
That’s pretty awful, and it’s even worse when you look at graphs and realise that the French have been investing more than £500million, the Germans more than £250million, the Americans more than £2billion and the Japanese nearly £3billion.
UK energy R&D investment actually peaked at about £250million in the mid-1980s, which was an era historically important for other events, such as the deregulation of the City. Presumably the government of the day thought the free market would take care of any energy technology development needs. It did, of course, – but, sadly, not here.
Wicks says: “The UK does not compare well with other countries. This is partly a result of the UK not having a major industrial base in the energy sector.”
What an admission. Of course, those of us who have been in the sector almost since it came into being are fully aware of this.
What’s more, we also know that, despite various initiatives supported by all the great movers and shakers of our time, nothing has changed.
In fact, it’s probably getting worse as a consequence of the recession, the credit crunch, and so forth. Indeed, according to some, there is evidence that the level of entrepreneurial activity across all sectors in Scotland is falling off.
However, like many, I was highly surprised by comments made by Schlumberger boss Andrew Gould during Offshore Europe.
He said: “I’m not sure that the appeals from politicians for us to solve the renewable energy equation are the right ones.”
And he added: “I’m not sure that our skill sets are those that will be required to develop renewable sources, but we will have contributions to make.”
You could have knocked me down with the proverbial feather when I heard that. After all, Schlumberger is one of the most technologically capable companies in the industry and I simply don’t believe they don’t have some people already looking at clean energy technologies.
However, if they don’t, I would recommend that Gould needs to go and find something else to do with his life, because I doubt many of his shareholders would be very pleased with his attitude.
If I was running Schlumberger, I would already have a division working in the clean sector.
Don’t have the skill sets? Well, go put an advert on the internet. Schlumberger has the financial clout to attract all the right people it needs.
That said, one thing Gould did comment on that I agree with was, “The technical solutions to the use of clean coal will undoubtedly be the most significant long-term contributor to stabilising emissions. Coal cannot be ignored as a future energy source”. He’s right.
But it is actually quite interesting that some people think not just about renewables, but economic development in general. If you want a good example then look no further than the strangely named ACSEF, which stands for Aberdeen City and Shire Economic Future.
ACSEF has developed a project proposal called Energetica, the overall aim of which is “to create a concentration of energy technology companies, housing and leisure facilities along a 30-mile corridor from Aberdeen to Peterhead”.
ACSEF says that “the realisation of the Energetica vision will transform this area into a global showcase for energy efficiency, green energy and related firms”, and it will “consolidate Aberdeen’s position as one of the world’s major offshore energy centres and the energy capital of Europe, attract new high-value investment to the region and support the export drive of indigenous business”.
Sounds good, doesn’t it? And it is a very laudable vision for any organisation at the forefront of economic development to hold – except, of course, it seems to have glossed over some rather important issues.
As a property development exercise, it’s fine, but as an economic development exercise, I really don’t see how it will work – especially if the intention is to help develop a renewables technology sector.
One problem is that not all of the very few renewable technology companies we have in Scotland are actually based in or around Aberdeen. They are spread around Scotland and, of course, many are based elsewhere in the UK – and some even have their origins overseas.
As an example of how the best intentions can easily go wrong, the recently opened Energy Development Centre in Aberdeen has the stated aim of encouraging new technologies and turning research into marketable products.
So you would assume this was aimed at indigenous companies. Sadly, though – or amusingly if you have my sense of the ridiculous – its first tenant is a Norwegian-owned outfit. It’s not a renewables company, but you get the point.
Someone referred to Energetica as a sort of “Silicon Valley”. But if you understand the story of how Silicon Valley came about, you would know that it wasn’t the engineers and scientists or entrepreneurs that created Silicon Valley, but the venture capitalists and bankers who spotted there was something going on there and decided they wanted a slice of the action.
They put their financial muscle behind the companies and the rest is history.
So if ACSEF really wants Energetica to succeed in the way it should, then it really needs to be able offer more than an office or workshop unit.
In short, it needs to create a venture fund to help create or attract the companies we really need. In fact, I would go so far as to say that, if necessary, that fund should buy companies and move them here to help create the critical mass and synergies that the new energy era will rely on.
But if it’s just going to be another property-development exercise using taxpayers’ money, then frankly, why bother. If we want to develop that major industrial base in the energy sector, Energetica needs to be a means to an end, not an end in itself.