Local councils can get blamed for a lot of things, sometimes with good reason, but also unfairly from time to time. Clearly, the price of oil and the operational decisions of major energy firms fall well outwith the remit of elected representatives at the town house. However, there are two key areas in which the industry has made it clear that Europe’s oil capital needs improvement.
The UK government has granted permission for an offshore wind project which is expected to create up to 2,500 jobs. Hornsea Project One in North Lincolnshire will be made up of three offshore wind farms with a maximum capacity of 1200MW. Once built, it will generate enough electricity to power more than 800,000 homes.
Serinus Energy has spudded a second exploration well in Romania. The Moftinu 1001 well has been drilled within the 765,000 acre exploration block known as Satu Mare Concession. Logs indicated a net pay of 17 metres at depths ranging from 730 to 900 metres.
Oil major BP said it expects to incur restructuring charges of $1billion over the next five quarters. The company will present its future strategy to investors in London following an announcement earlier this week that job cuts would be made. Chief executive of BP Upstream, Lamar McKay, and a senior members of the management team are set to outline its changing position on the back of falling oil prices.
The oil and gas industry could lose an estimated 35,000 jobs within the next five years, a new report has found. The study, 'Fuelling the next generation: A study of the UK upstream oil and gas workforce' was commissioned by industry body Oil and Gas UK, industry skills and safety body Opito and the Department for Business, Innovation and Skills. It said jobs could fall from 375,000 to 340,000 by 2019. It also estimates 12,000 new workers will be needed for the UK sector.
Local councils lack the expertise and resources to properly regulate the UK’s fledgling shale gas industry, according to a new study. Under 60% of those questioned for the report believe that local authorities cannot manage the environmental risks when considering planning applications for shale gas wells. Even among local government themselves, only 49% of respondents think that they have the skills to weigh up the environmental risks.
For over 20 years I have analysed oil price fluctuations. Why? Well, every country’s economic prospects and people’s jobs, yours and mine, are affected in one way or another by what happens to oil prices. Life and death decisions, including continuing national sovereignty for some nations, hinge on the price of oil. The current dramatic and fast 35% fall in oil price could be a pivotal moment in historical events. For example, will the oil revenue dependent Russian economy survive if oil prices stay at around $70 a barrel? If not, what action will Russia take?
French oil company Total has finally admitted its new £800million Shetland gas plant will not be completed this year. A company spokesman said it was likely to be ready during the first three months of the 2015, about nine months behind schedule. Following months of denial and a profit warning from main contractor Petrofac last month, Total issued a short statement yesterday.
The reforms to the oil and gas tax regime announced by the Chancellor and Danny Alexander this week are, of course, welcome. Particularly in light of the Chancellor’s admission that it has been 21 years since the oil and gas industry last received a tax reduction. However, this announcement only goes a short way towards reversing the unexpected and damaging 12% increase in Supplementary Charge tax introduced by Danny Alexander at the 2011 Budget.
The Treasury’s plan to reform the oil and gas fiscal regime is an interesting and encouraging document, which recognises the importance of the industry, while at the same time acknowledging the need to be more competitive in attracting and promoting capital investment in the UKCS. It has the hallmarks of collaboration, with the Treasury accepting that they must adjust their thinking as to tax receipts from the UKCS, and it is the first time in recent memory, committed to black and white, that ‘we are all in this together’. The Treasury does not publish a document of this importance without it having being very carefully vetted.
It looks as if the UK Treasury has a fiscal plan that might work for the UK Continental Shelf and the industry appears broadly receptive. But there were multiple warnings issued to Treasury chief secretary Danny Alexander in Aberdeen that time is running out and that he must deliver concrete measures by the Government’s Spring Budget. Indeed, this urgency is made all the more acute by the revelations that Opec swing producer Saudi Arabia is now apparently content to let the oil price drop to around $60 a barrel and that it be a long, rough ride for everyone. The gathering of industry leaders and media at Oil & Gas UK’s offices to listen to Alexander and Tory colleague Priti Patel (exchequer secretary) was large.
There are three things wrong with the UK Parliament's approach to the oil industry. Firstly, there is no gratitude whatsoever. Over the last 40 years more than £330,000million has poured into the Westminster Exchequer, around £60,000 per head for every Scot. Scotland's resources have bankrolled successive Tory and Labour Chancellors. They present any crumb of a concession as if it were a gift.
The UK Government has unveiled a radical plan aimed at rewarding investment in the North Sea in a bid to see as much oil and gas extracted as possible. A review of the fiscal regime for the oil and gas sector was announced in this year’s Budget, with a new Treasury report saying “significant change” was needed in order to continue to attract investment. Chief Secretary to the Treasury Danny Alexander launched the new report as he met key industry figures during a visit to Aberdeen. There is still “significant hydrocarbon reserve” in the UK Continental Shelf (UKCS), the Government said, which could “generate significant benefits for the UK” if it can be recovered.
The head of oil and gas for professional services firm EY said the government has taken a "crucial step" towards protecting the longevity of the UK's oil and gas industry. Derek Leith said the recommendations were also in line with what had been set out in the Wood Review. The Chief Secretary to the Treasury, Danny Alexander, was in Aberdeen to outline three principles which will underline the future of oil and gas fiscal policy, as well as a new set of proposals. Mr Leith's comments come after he spoke to Energy Voice yesterday to give his initial reaction to the Chancellor's Autumn Statement.
Offshore firms will be offered new tax breaks today to trigger a fresh wave of North Sea exploration, it can be revealed. Energy Voice has learned that Chief Treasury Secretary Danny Alexander will reveal plans to try to end the UK's exploration crisis through a system of tax credits for seismic surveys. The move is expected to be welcomed by industry leaders who have repeatedly called for extra incentives to stimulate flagging exploration rates.
The head of oil and gas for professional services firm EY said the Chancellor's announcement could prove to be a "turning point" for exploration and production in the North Sea. In an interview with Energy Voice, Derek Leith said the initial steps taken may receive a mixed review from the industry. Further announcements are expected tomorrow, in Aberdeen, by the Chief Secretary to the Treasury, Danny Alexander.
Eyebrows were raised after it emerged that the incoming chairman of the new oil and gas regulator would enjoy a £100,000 pay packet for a job that requires just 2.5 days a week work. The Oil and Gas Authority (OGA), formed on the recommendation of the Wood Review, is on the hunt for a chairman or woman after it recruited former BG Group boss Andy Samuel as its new chief executive. Mr Samuel, who takes up his new job on January 1, will be paid £250,000 per year.
Lord Smith of Kelvin, chair of the Smith Commission on Scottish Devolution, will appear before Holyrood’s newly-convened Devolution (Further Powers) Committee. His report recommended the UK government would remain in charge of licensing for all offshore oil and gas extraction under the proposals but Holyrood could get the power to determine if fracking goes ahead in Scotland.
Hopes have been raised that an innovative renewable energy scheme harnessing the tides could get the go-ahead, after the Government announced it was starting in-depth discussions on the project. The Treasury has announced it will start closer discussions with Tidal Lagoon Power Ltd, the company which is aiming to build the world’s first tidal lagoon power plant in Swansea Bay, to see if it is affordable and value for money for consumers. The developers of the £750-850 million project have said their application is the first step to developing lagoon technology that could meet 10% of the UK’s electricity needs from the tides.
The decline in oil prices could have a substantial adverse effect on the oil and gas industry in the UKCS (UK continental shelf) a leading industry expert has warned. Research by Professor Alex Kemp and Linda Stephen from the Aberdeen University has found that if the current drop in price continues, there will be reduced investment and production. Using economic modelling, the pair highlighted two scenarios which reflect investment screening prices.
Last month at PETEX in London, the hunt for shale gas resources in the UK was a hot topic and among the companies offering their expertise and wares at the show was CGG, currently being stalked by fellow French group Technip, and US energy services giant Baker Hughes, which arch rival Halliburton ha made a $35billion bid for. While companies such as these cannot easily answer the social and political questions, or indeed even wish to engage that way, they can contribute to the debate on technical feasibility and potential. And both Baker and CGG are well equipped to do this. Firstly, and according to CGG, we in Europe and not just the UK have the opportunity to benefit from the latest developments in North America. Integrated workflows, which bring together a broad range of geoscience data, have shown great potential for the comprehensive reservoir characterisation required to optimise drilling and completion activities in heterogeneous unconventional resource plays.
I don’t particularly like Boris Johnson and I certainly don’t support his politics. I also resent his constant lobbying for London which, incidentally, I don’t really like much either. The museums are great but you can keep the rest of it. I’m a country boy at heart. However, something Boris Johnson wrote last year I have to say I do agree with completely although I’d prefer you didn’t spread it around too much as it might damage my reputation. Commenting on what he called the UK’s “sterile debate” over Europe he said that if it culminated in our leaving the EU then it would quickly discover “that most of our problems are not caused by Brussels, but by chronic British short-termism, inadequate management, sloth, low skills and a culture of easy gratification and under-investment”.
The UK government has signed an agreement with Canada to work together on research and knowledge sharing for Carbon Capture and Storage (CCS). Both countries released a joint statement which identifies how they plan to work together and build on the work they have already undertaken. The use of CCS is viewed as one of the most cost effective technologies for decarbonisation of the UK’s power.
A leading oil and gas company has cancelled Christmas parties for thousands of workers – because bosses fear upsetting colleagues who are losing their jobs. Aker Solutions, which employs more than 2,000 people in Aberdeen, called a halt to its annual festive celebrations to show “sympathy” with hundreds of staff in Norway who have been affected by cutbacks. The company is shedding posts in Stavanger, Bergen, Alesund, Kristiansund and Trondheim, but not in Aberdeen. Staff based in the north-east were reported to be upset at the decision to ditch the festivities. The oil and gas services firm has gone all-out in recent years to celebrate the festive season, hiring specialist party planners to run a family fun day at Ardoe House Hotel.
Onshore explorer Europa Oil and Gas plans to begin production testing at its Wressle-1 well in North-East England. The company’s chairman Bill Adamson will announce development in its work at an annual general meeting today. Drilling of the Wressle well, which started in July, marked the launch of a programme focused on proving up a potential 39 mmboe (million barrels of oil equivalent) within Europa’s portfolio in Ireland, France and onshore UK.