Having had time to reflect over the holidays, I spent time thinking about the impact of the last 12 month’s recession on our company culture. Our team working tirelessly to do more with less to satisfy expectations of the market.
Private investors in small- to mid-cap oil and gas firms have had a tough few years during the downturn.
In an industry where there are still few capital projects being initiated following the 2014 price collapse, and pressure on any new project to deliver cost effectiveness and ahead of schedule, IT is continuing to be a key enabler for upstream oil and gas companies. The industry considers digitalization as the way for companies, large and small, to work ‘smarter’ and do more, with less. Here, Hege Wroldsen, Director of the Oil and Gas Center of Excellence at global enterprise applications provider IFS, outlines four key trends that are transforming the oil and gas industry in 2017.
While the oil and gas sector has faced a challenging year in 2016; there are signs that the industry is approaching a turning point. North Sea production started to increase again for the first time in over fifteen years, business confidence is beginning to improve, and new fields have come on-stream.
While the entire sector has been affected by the prolonged downturn in oil and gas, the workforce has undoubtedly felt the biggest impact. But every cloud has a silver lining, the downturn has forced companies to think smarter about their recruitment and retention strategies. This influenced a number of recruitment and workforce trends in 2016:
We could be forgiven for thinking that the transition to sustainable energy has been achieved. In 2014, renewables generated 49.9% of Scotland’s electricity output, and 59.4% in 2015. On 7 August this year, renewable power provided more electricity than Scotland needed [2] and, in the third quarter, it produced 26% of the entire UK’s needs.
There is no question that 2016 was another very challenging year for the oil and gas industry.
Innovation, diversification and transformation are three words which I make no apologies for repeating. All will be the bedrock upon which Aberdeen’s future is built.
To state that the years 2015 and 2016 have been difficult for activity in the North Sea oil sector would be a gross understatement.
In 2008, painfully aware of the need to revamp the workings of the oil sector in Nigeria, the Obasanjo Government took the decision that the regulatory framework of operations in the sector needed to be better clarified and aligned. To do so, it sought to introduce umbrella legislation in the sector, popularly described as the Petroleum Industry Bill (PIB). At the time, I had led the Aiteo Group, a growing indigenous energy entity, for some eight years. It was a period of considerable growth for Aiteo within which it had established itself as a major player in the energy space in Nigeria.
While many of us may be more than a little fed up of hearing the term ‘Brexit,’ it is sadly one that will continue to dominate headlines in the year ahead as our departure from the EU has so many potential implications across many industry sectors.
If ever there was a year which the phrase ‘expect the unexpected’ seemed relevant – 2016 is it. From the referendum decision to leave the European Union, and the resulting new leadership in the UK Government, to the election of Donald Trump, it’s been a year of unpredicted events.
When looking at oil price trends over the years since the 1920s, it becomes apparent that apart from the cyclical spikes every few years, $100 plus was never going to be the norm. However, we became complacent in that unprecedented period of sustained, high oil price and the thought of living in $50 - $55 oil seemed unthinkable in 2014.
As the dawn of “Asia’s Century” is well and truly underway, surely this creates a number of potential opportunities for Scotland and the UK as Brexit opens up a new world of opportunity and untapped potential.
It is that time of the year again when we have the finals of Strictly Come Dancing, the Apprentice, X Factor and, of course, the Sports Personality of the Year. For all the glamour and glitter, there is something quite comforting in enjoying the achievements of all of those participating in these great shows. The incredible drive and ambition to succeed, the relentless focus on continuous improvement and the performance feedback are all characteristics which are equally valid in the oil and gas industry.
There’s no doubt the oil and gas industry has undergone another turbulent and trying year, as the backlash of the oil price crash in 2014 has resulted in unprecedented job losses, project delays and cancellations, and a rather pessimistic outlook for 2017. However, the findings of a recent survey predict the sector has now hit its lowest point and that there are cautious signs of a much yearned for but measured upswing.
Since stepping down from the oil and gas industry last December I have been involved in lots of other business sectors. I have been mentoring some leaders of medium-sized businesses and working with several charities.
I am never quite clear why the government department that is now BEIS publish the latest breakdown of how power was generated to the grid a few days before Christmas, but it does mean there is less attention than there should be on what those changes show us.
If nothing else, 2016 taught me to expect the unexpected. In the context of the legal profession the drivers for change that we have experienced this year may well be seen in the future to have eclipsed the impact of the shockwaves felt in 2008/9.
Baroness Neville-Rolfe has stepped down as energy minister after just five months in post to be replaced by Lord Prior. That's six energy ministers in six years - or more changes than the number of images that David Bowie had over a forty year career. (Come to think of it Baroness Neville-Rolfe has featured more changes of hair colour over her career than Bowie.)
When I was offered the opportunity to be guest editor of Energy Voice this week, it took me a nanosecond to decide.
Will 2017 be the turnaround year for the upstream oil and gas industry? In terms of the industry learning to embrace innovative technology and the potential for this technology to deliver transformational operational and financial performance benefits – then I say yes!
Statoil has donated NOK 5million (£465,000) to assist the Red Cross in its efforts to alleviate the humanitarian crisis in war-torn Syria. That's a substantial donation in anyone's language. There are few industries that are more global than oil and gas. It is also difficult to think of any other business sectors that operate in more challenging environments. Making a commitment such as this is both appropriate and heartening.
It goes without saying that the North-east is going through one of its most turbulent times in recent history, as the oil and gas sector faces major global challenges and a plummeting oil price. The impact on business and people in the region is clear. At Elevator, however, we are seeing a dramatic uplift in the number of new business start-ups beginning to feed through. It took a while to kick-in, but 2016 will go down as the year that large numbers of people, many previously employed in oil and gas, looked to start a new venture as a viable alternative option for their future.
I would like to address some of the concerns expressed in the Energy Voice opinion piece ‘SR crows about renewables supply chain performance overseas – I beg to differ‘, December 13th.