Optimism over Scotland’s oil industry despite current gloom

Scotland’s oil and gas sector has a bright future for many more years with an abundance of untapped resources just waiting to be recovered, claim industry experts.

There was an infectious mood of optimism among the 55,000 or more delegates from 104 countries who attended this year’s SPE Offshore oil and gas expo in Aberdeen – the second highest number of visitors in the long history of the show.

AECC Offshore Europe

Photograph by: Alan PeeblesAECC Offshore Europe

A record 1,535 global organisations exhibited this year, showcasing their products, services and expertise. This included 336 companies exhibiting at the event for the first time. The sold-out space covered 27,228 square metres, with more inside space than ever before.

The theme of the September event, inspiring the next generation, aimed to help address the technical, business and people challenges faced by the industry, now and in the future, by encouraging a new generation of talent.

More than 400 school pupils from Aberdeen, Aberdeenshire, Highland and Angus took part in three half-day workshops and site visits, which gave them an insight into the industry and the opportunity to meet young engineering professionals who shared their work experiences. Other Inspire events included a Career Pathways Fair, a Student Development Summit, and Energy4me aimed at school science teachers.

Stephen Graham, Chief Operations Officer for the SPE, said: “The conference programme successfully addressed a number of relevant industry priorities, incorporating the theme of inspiring the next generation. Combined with a busy show floor where exhibitors met with existing and potential customers, I believe SPE Offshore Europe 2015 was a great success.”

Photographed by Alan Peebles

Photograph by: Alan Peebles

Other new features at the show included an Investment Workshop which gave entrepreneurial delegates the opportunity to meet potential investors.

The positive vibe of the event was echoed by exhibitors, many of whom said that not only had the 2015 show been a good one for business, it had been one of the best they’d experienced.

“It has been a very successful show for us with one of the benefits being that it has given people the time to talk,” said Ian Crossland, UK Director for RESMAN.

“Very senior management from the operators have been taking time to meet their vendors and contractors to talk business, and there have been indications that things are moving in the right direction.”

Kris Frampton, CETCO Energy Services, agreed: “There were more business opportunities for us than there were two years ago. I think the reason for that is that there is a lot more focus on production,” he said.

The success of the exhibition came as Scottish MPs renewed calls for the UK Government to improve exploration incentives for the North Sea which will aid the development of ageing and harder to reach fields

“It is clear that the North Sea is not closed for business and with the right support Scotland’s oil and gas industry has a bright future ahead of it,” said Callum McCaig, the SNP’s Energy spokesperson.

“Successive Westminster governments have squandered our oil revenue, greedy tax grabs have put jobs and investment at risk and last year exploration reached its lowest level in at least two decades with only 14 exploration wells being drilled in the North Sea.

“This compares to Norway where more than 40 exploration wells were drilled in 2014 and where the Johan Sverdrup field was discovered, in mature waters that had previously been explored as recently as 2010, with the field expected to hold approximately two billion barrels of oil.”


Photograph by: Newsline Media

The urgent need for an exploration of incentives comes in the wake of comments made by Norwegian Statoil CEO Eldar Saetre that there is plenty of oil left in the North Sea.

During a trip to his company’s Aberdeen base Mr Saetre, whose comments were reported in the Aberdeen Press & Journal, said: “It’s important that the government continues to look at ways to incentivise the industry for exploration, because it all starts with exploration.”

Statoil is currently developing the largest field on the UK Continental Shelf for more than a decade at a cost of more than £4.5 billion. Lying just 93 miles east of Shetland the new Mariner field is expected to produce 55,000 barrels of heavy oil a day for the next 30 years.

The company is also reinvesting in the 300million barrels Bressay field and Mr Saetre has warned oil and gas companies not to decommission too early as there are still a lot of resources to be found.

“We believe even in mature provinces the industry can still make the mistake of leaving too early,” he said.

“We have the capability to take a second look and see if there’s anything we haven’t seen before.”

Construction of Statoil’s new office for 200 staff in the Kingswells area of Aberdeen is expected to be completed next month while development of the Mariner field will create a further 700 jobs.

AT the same time Statoil’s CEO said there were more resources to be recovered from the North Sea it was announced that production had been approved by the UK Oil & Gas Authority for work to start on the Culzean field.


Photograph by: Newsline Media

The Maersk Oil operated project in the UK Central North Sea is expected to produce enough gas to meet 5 per cent of total UK demand at peak production within the next five years.

Culzean, the largest gas field sanctioned since East Brae in 1990, was discovered in 2008 by Maersk Oil and its co-venturers. The gas condensate field has resources estimated at 250-300 million barrels of oil equivalent and production of up to 90,000 barrels of oil equivalent per day is expected to start in 2019 and continue for at least 13 years.

Scotland’s Minister for Energy Fergus Ewing said the development of Culzean demonstrated that there remain considerable opportunities to extend production in Scottish waters for decades to come.

However, in order to ensure the recovery of the remaining North Sea resources is maximised, Mr Ewing said it is vital that the UK Chancellor, George Osbourne, introduces measures to support exploration to boost future production.

“It is critical that reforms to the regulatory and fiscal regimes applying in the North Sea are expedited and prioritised with a view to ensuring the economic viability of investment if we are realise the opportunities for development of the vast remaining resources in the North Sea,” said Mr Ewing.

“We are extremely concerned there are a large number of fields which may be forced to stop production prematurely – when there is a great deal of oil and or gas to be extracted. Since the both the UK and Scotland have objectives to maximise recovery, the premature cessation of production could be one of the most costly policy failures in the UK Government’s history due to the potential loss of future tax revenue.”