Oil production in the North Sea is entering a new era, a senior executive at an international oil and gas service firm said at the Offshore Europe exhibition yesterday.
Bill Dunnett, managing director of Petrofac’s offshore engineering and operations division, told the Press and Journal that the days of large oil reservoirs were in the past and companies now had to focus on smaller projects.
He added, however, that the North Sea had the potential to continue producing oil and gas for decades.
Mr Dunnett said: “I have worked in the North Sea in the past, and came back to work with Petrofac here two years ago. I would not have come back if I thought the North Sea market was a dead entity.
“With satellite developments as well as fully exploiting mature fields, it is still an exciting proposition.
“We are still training and introducing employees with key skills to the area, and our global base for offshore operations is in Aberdeen.
“I still see a long-term business here, but it will be a different kind of business.
“There will be more smaller projects. The bigger projects were from another era.
“We are in a new era for the North Sea, and Petrofac very much wants to be a part of that.”
Mr Dunnett’s comments came less than 24 hours after Wood Group chairman Sir Ian Wood said the UK’s North Sea oil and gas reserves could be worth an extra £787billion if fully exploited. Sir Ian said that the right tax incentives from the UK Government would allow the offshore industry to extract a further 25billion barrels in the years ahead.
That is more than twice the 12billion barrels that may be produced without additional government incentives to extract marginal reserves.
Mr Dunnett also said yesterday that Petrofac had changed its rates for workers involved in North Sea projects, adding that rates calculated by man hours would be squeezed. He said: “The contracts calculated by man hours are definitely going to get squeezed, not just with us, but with everyone.
“It is very clear that, rather than the manpower-type contracts, performance-based contracts are the future, and that is how it should be.
“Others are complaining about this type of contract (manpower) being squeezed, but we feel we can respond to this change and if we can create value then it can be shared with the operator and everyone else involved.”
Earlier, Petrofac chief executive Ayman Asfari said the global oil service company was well prepared to begin future projects despite the recession.
He said: “A healthy balance sheet gives us lots of options in this market.
“We are confident the overall market is going to come back, and in our markets we are not seeing any slowdown in demand for our services.”
The North Sea now accounts for nearly one-third of bottom-line profits at Petrofac, which employs about 4,000 people in operations managed from Aberdeen: more than one-third of its worldwide workforce.