North Sea still ‘engine room’ for oil giant

The North Sea will remain an engine room for global growth for energy giant Shell, it’s UK boss told industry leaders in Aberdeen yesterday.

Glen Cayley said the UK, where Shell has 30 platforms and 30 subsea installations, accounted for 5% of group production and was one of its heartlands.

He added, however, that the industry needed to collaborate more to succeed and needed the support of government.

Mr Cayley, Shell Europe’s upstream technical vice-president, was speaking at an Oil and Gas UK business breakfast in the Aberdeen Exhibition and Conference Centre. He said: “The UK has long been and will remain one of the core upstream engines of Shell.

“Other heartlands are Norway, the Netherlands, Malaysia, the Gulf of Mexico, Oman and Brunei.

“We expect these engines to fund our growth pipelines in integrated gas, unconventionals, deep water and heavy oil.”

He said 40billion barrels had been extracted from the North Sea and that an estimated 17-24billion were left, but added: “A high fraction of that prize will remain in the ground without co-operation from government. We need field allowances and tax certainty on decommissioning, and we need stability.

“It has been said more than once that the UK is less stable than Venezuela in its fiscal regime.”

He said the industry needed to reduce its costs, possibly through operators sharing equipment or vessels.

It also needed to increase exploration and tackle issues with aging platforms and pipelines, some of which were built cheaply in the 1990s.

“The industry cannot afford three or four learning curves,” he said, adding. “We really have to get joined up and learn from each other.”

Other speakers included Patrick O’Brien, strategic business and marketing director at Wood Group Kenny, who highlighted how in Norway the industry was more co-ordinated and asked why this was so.