WHEN we at Oil & Gas UK recently published our 2011 Economic Report, we highlighted some pretty positive findings: increasing investment, a flourishing supply chain, a massive economic contribution and a bright future ahead with considerable reserves remaining to be extracted.
However, this does not prove, as some have suggested, that the tax increase announced in March has not profoundly affected this industry. Our Economic Report came with a stark warning of the potential barriers which must be overcome if the UKCS is to enjoy a long and healthy future.
The news of the significant investment made by BP and partners in the Clair Ridge project was, of course, a welcome boost for the economy and our energy security.
The announcement that UK oil and gas production could be maintained into the 2050s was rather timely after some detractors misled the public by claiming that Oil & Gas UK’s report said the UKCS might only have 17 years left.
However, this fantastic development does underline Oil & Gas UK’s conclusion that what we are now seeing is a two-speed UKCS – where large-scale projects such as this with the financial backing and the momentum to go ahead, while projects with smaller volumes and marginal economics simply cannot.
Following the tax increase announced at the last Budget, more than one billion barrels of oil and gas have become fiscally stranded. To put it bluntly, the current tax system renders them uncommercial and there is a risk they will stay below the seabed forever.
Since Chancellor Osbourne’s 2011 budget, Oil & Gas UK has enjoyed a very constructive working relationship with the government, seeking to find ways to stimulate investment and resolve uncertainty around decommissioning relief.
We are working towards a positive outcome on both these issues for next year’s budget. If we are successful in this joint endeavour with the Government, I believe it will provide a significant boost to investor confidence and deliver further investment, growth and jobs to the UK economy.
Of course, there are challenges besides fiscal ones that must be overcome if these goals are to be achieved. For example, the challenge of skills retention is a considerable one. We know we need to sustain the flow of skilled people entering – and remaining in – the industry.
Oil & Gas UK’s recent 2011 Demographics Report highlighted a net loss of experienced offshore workers in the 30-60 age group.
Whether workers in this age group are relocating to other oil and gas regions around the world or returning to onshore roles, their departure leaves vacancies which must be filled by those with the right skills and experience.
From a survey we conducted earlier in the year, we know the roles companies are finding most difficult to fill are in the fields of engineering, science and technology.
On the plus side, our Demographics Report also showed that the number of people under the age of 30 entering the industry has risen over the last five years.
With many companies having put in place fast-track development programmes, it is this new generation of younger people who will fill the senior roles of tomorrow.
Oil and gas finds itself competing with other industrial sectors in selling itself as vibrant, responsible, technologically advanced and offering long-term career opportunities.
Oil & Gas UK will, of course, continue to support the efforts of OPITO (Offshore Petroleum Industry Training Organisation) and the wider industry in securing and retaining the most talented individuals. In this endeavour, I believe it’s important that we celebrate and reward our brightest people and companies.
The 2011 Oil & Gas UK Awards, which again attracted a phenomenally high calibre of entry, provided such a stage. If you ever needed proof that the oil and gas industry is a place where people can achieve great things in the workplace, enjoy every minute of it and be suitably rewarded for doing it, just take a look at our winners. I’d say the future of the UKCS is in good hands.
The individual category winners of the 2011 Oil & Gas UK Awards presented on November 3 are:
o Overall Excellence – Ann Davies, well intervention engineer (Subsea), BP
o Young Technician of the Year – John Piper, instrument technician, BP Exploration
o Mentoring – Paul Martin, platform trainer, Petrofac
And in the corporate categories:
o People Development – Cape
o Business Efficiency – RBG Limited
Malcolm Webb is chief executive of Oil & Gas UK