The Energy 2050 survey finds a roughly even split between those who see oil back over $100 per barrel by 2020, and those who see it trading in the (albeit rather wide) range of $60-100 per barrel.
Less than 10% of respondents expect prices to track under $60 per barrel.
Not unsurprisingly in the current environment much of the focus is on managing through the next five years, rather than the long-term dynamics of the industry.
A particular challenge remains for the higher-cost and mature areas like the North Sea where there is a clear need to address the cost, technology and ownership dynamics, but where confidence in the medium-term pricing environment is key to making the additional investments that are required to take advantage of the opportunities that still exist.
“Crude prices drop by 50% confronting the oil industry with major challenges”.
Sound familiar? If you have been in this industry for more than ten years, you’ve seen at least one, maybe as many as five or six, major crude price down turns.
Is this 1985? Or 1990? Or1998? Or 2008 again? Some things seem to be the same but to me something feels very different as well.
Can recent history help us understand what comes next or is this a “new frontier”?
First principles first – crude is a semi finite commodity. As a commodity, it is subject to significant price swings dependent upon demand changes or supply disruptions.
Much of the past major crude price increases have been driven by either major supply threats or actual disruptions – some intentional and other complete surprises.
“You can no longer solve the energy problem by ignoring the environment or solve the environment by ignoring energy.”
This was the sentiment of Business Opportunity Manager Bill Spence from Shell Upstream International as he spoke about the oil major’s
CCS (Carbon Capture Storage) project at All-Energy 2015.
He said there could be “no silver bullet” but that both the UK and Scotland – where the Peterhead Carbon Capture Storage project would be based – had begun to take an important lead.
Once completed, it would be the first full-scale CCS project on a gas-based power station.
Life might be tough in the oil & gas industry right now, but the chief upstream strategist at oilfield analysts IHS told OTC delegates at an OTC gathering that a staggering amount of new oil production was needed to meet forecast demand.
Bob Fryklund said that 50million barrels per day of additional production would be needed to meet projected demand by 2040 ... that’s about 55% more than today.
He said that it was possible to see about 20million barrels per day of that figure; after that it became more difficult to identify how the gap would be filled.
The oil industry must leverage the sector’s current down cycle if it wants to give itself a fighting chance for the future, industry leaders said at standout event at this year’s OTC.
It’s understandable, following a 50% drop in the price of oil between June last year and March 2015, that participants of Energy Voice’s ‘Energy 2050 – Securing Our Energy Future’ survey, expressed the ‘need to slash costs’ as the number one challenge for the oil and gas industry right now.
A renewables group focused on encouraging more women into the sector is looking for further funding options.
WiRES (Women in Renewables Energy Scotland) is looking at its next steps after funding from Close the Gap came to an end.
Dr Abbe Brown, from the Centre for Energy Law, the University of Aberdeen said more needed to be done to encourage women and people generally to take up STEM (Science, Technology Engineering and Maths) subjects and close the skills gap within the industry.
Global energy solutions provider Vergnet has set up a UK subsidiary as it looks to set up a British base.
The company, which s headquarterd in France, has installed a total of 28 wind turbines across the country.
The manufacturer of medium scale wind turbines will set up the base in Ripley, Derbyshire.
In a low oil price environment, companies face a difficult challenge; maintaining vital business relationships with clients and operational capability, whilst maintaining profitability.
The European's Commission's research and innovation programme Horizon 2020 has granted €17million in funding for the Clean Energy From Ocean Waves (CEFOW).
The five-year project is to research and develop the use of the Penguin wave energy converter, which was developed by the Finnish company Wello, in electricity grid conditions.
The multi-device test project will be carried out at Wave Hub in Cornwall.
Rahm Emanuel, now the Mayor of Chicago, famously said “You never let a serious crisis go to waste. And what I mean by that, it’s an opportunity to do things you think you could not do before.”
While what we are experiencing just now may feel like an oil price crisis, that’s not really the root cause.
Where the crisis lies is in the high cost of recovering oil and gas – particularly from the North Sea. At the expense of stating the obvious, there are two variables at work which will determine the health of the oil and gas sector – price and cost.
2015 is proving to be challenging for the North Sea. Despite the oil price reaching its highest level so far this year, touching $68 per barrel this week, there seems to be no end in sight to the continuous stream of concerning news about companies cutting costs, announcing redundancies and cancelling activities.
The UK offshore industry is in a fragile state. Around 300 fixed production facilities remain in operation, many of which are in excess of 40 years of age and require continuous maintenance and integrity management provision.
The need to slash costs is the number one challenge for the oil industry, according to a major research project by Energy Voice, but leaders also believe crude prices will bounce back above $100.
Twelve months ago Step Change in Safety leader Les Linklater was staring down one of the toughest safety adaptation challenges in the sector’s recent history.
An Aberdeen entrepreneur now based in Houston has shrugged off a $20million (£13.2million) hit to his business as a result of the Petrobras “graft” scandal.
Scotland has always led the way in renewables and All Energy has long been a showcase for the wide range of technologies which will enable the renewable and low carbon transition.
In current market conditions, the best way to nurture the skills and profit margins of a Scottish company is to grow it abroad, advises chairman and partner at Scottish independent accountancy firm Campbell Dallas LLP, Ian Williams.
The links between Texas and the North-east of Scotland are well known. The latter borrowed the native oil and gas pioneers from the US to kick-start its industry in the North Sea.
Now, the UK Continental Shelf is established in its own right and is seen as a testing ground for projects with international potential.
The region sends thousands of experts with years of knowledge to work in all parts of the globe.
