£250 a night to stay in a kid’s tree house! Worse still is being stranded in the Aberdeen Exhibition & Conference Centre (AECC) car park. The oil price isn’t what it was, but some things remain the same.
I recently slept in a hotel room that will cost £3,364.09 for Offshore Europe.
I have heard a speaker in the hotel’s function room equivocally refer to it as “beauty comes in many forms”. At least the hotel fits in with the Aberdeen industrial estate around it.
My own experience wasn’t bad, but Northsound over breakfast was more couthy than continental and I wasn’t tempted to pack the hotel’s toiletries. Hopefully its September visitors will get more VIP treatment; good news that the Marcliffe Hotel is still with us to set the standard.
With Brent crude prices falling below $50, widespread trader views of continuing oversupply and massive cut-backs in the oil and gas industry, Shell has begun drilling in one of the world’s highest cost locations, endeavouring to tap the huge reserves of the offshore Arctic!
So what’s going on?
We all know, but often choose to forget, that the oil industry is an extremely cyclical business, the continuing victim of regional wars, global geopolitics and macroeconomics.
After nearly 20 years of subdued prices, oil convincing broke through $50 in the second quarter of 2005, surging to exceed $140 in summer 2008 before collapsing again to $40 during the global financial crisis.
Take a look at the facts and figures behind BP's bumper $1billion investment in one of its North Sea assets.
The oil major has announced the cash injection could add up to 15 years to the project.
The money – £670million – will be funnelled into its Eastern Trough Area Project (Etap), securing its future through to 2030.
Ofgem, the gas and electricity regulator, has just published a report on Electricity Security of Supply which it dryly sub-titles: “A commentary on National Grid’s Future Energy Scenarios for the next three winters”.
A commentary, perhaps, but also a substantial indictment. One of the basic responsibilities of government is to keep the lights on and the wheels of commerce turning. Nobody reading this report will be encouraged to believe that such outcomes are guaranteed.
Not that the current government deserves any particular blame. This is a long-term problem that has its roots in electricity privatisation; at which point the responsibility for investment passed to private companies which generally found it more profitable to keep old plant running than replace it in good time.
Public policy focused on promoting renewables while failing to take account of the pressing fact that ageing nuclear power stations and environmentally unacceptable coal generators were dropping out of the system.
I find it impossible to feel anything but raw anger towards the Westminster Conservative Government’s policy on renewables and energy policy in general. Here is a government stating on the one hand that the country has to support the “makers” and export more yet on the other effectively stamping out a globally important growth industry with huge potential.
So far, Cameron & Co have scrapped or dramatically reduced support for onshore wind, solar, biomass, the Green Homes scheme, is selling the Green Investment Bank, has done away with the policy of building Zero Carbon Homes, reduced the incentive to move to lower emission vehicles and, of course, decided that the Climate Change Levy, which had been restricted to providers of non-renewable energy to businesses, will be imposed on renewable energy providers as well.
Last month saw a significant moment for this offshore oil & gas industry. What might be considered the single biggest change to affect domestic offshore health, safety and environmental management in many years came into force – the EU Offshore Safety Directive.
Following the Deepwater Horizon incident in the Gulf of Mexico in April 2010, the European Commission (EC) refocused attention on the potential for major accidents and, in particular, major environmental accidents, deciding that consistent standards were required for offshore operations across the European Union (EU) – particularly as many other European countries, such as Romania and Cyprus, were at the early stages of offshore development.
The initial proposal for an EU Regulation was met by strong opposition from Oil & Gas UK among others – against the threat that Regulation would have swept away our entire legal framework, which is recognised as world-class, used as an example of best practice by countries as far away as Australia.
This week saw a flurry of oil and gas news. Shell, BG Group, Statoil and Wood Group PSN all made the headlines. Our interactive map shows where and when oil and gas news was digested this week. To read more click here to see our Friday Five.
The oil industry in Scotland is going through turbulent times. The continuing low oil prices are threatening investment and blighting confidence in a sector which has seen prosperity through what were some pretty tough years for the rest of the economy.
Offshore workers are the people on the front line in North Sea oil and gas. When workers on the front line are fed up, the rest of us should sit up and pay attention.
After all, North Sea oil and gas generate huge benefits for the UK and Scottish economies, provide a very good living for many people who rarely venture offshore, and sustain strong local and regional economies across the North and North East.
Of course, it’s not just terms and conditions which are under threat. Shell has just announced thousands of jobs to go across the globe, in the belief that there will be “a prolonged downturn” in the price of oil.
Quelle excitement! The latest UK offshore car boot sale results; or rather the 40 or so 28th Round licence offers that required a bit more deliberation because of environmental sensitivities.
The Oil and Gas Authority (OGA) today confirmed the final bids for the 28th offshore licensing round – making it one of the largest round-ups in 50 years.
“Happy to meet, sorry to part, happy to meet again - Bon Accord!”. Aberdeen’s official toast is more than an excuse to stretch your legs during a civic dinner. Skills shortages will come back round, but retaining teams without the right work for them atrophies skills and erodes shareholder value. Offshore Europe 2015 is taking “inspiring the next generation” as its theme, but that’s not the only strategy for managing the next skills shortage.
I’ve received many questions following recent articles on how to manage during difficult times.
Readers are asking what specific things they could do, or I have done, or we are planning to turn the generic advice into practical measures.
Well, I suppose it all depends. My business situation will be different from everyone else’s, so my decisions may or may not be relevant to others, but I am happy to share some of the tactical options we took to make our business less vulnerable during the current downturn in our industry.
A discovery in waters off the coast of Guyana is estimated to hold natural gas riches which could be up to 12 times more valuable than the country’s economy.
The Liza-1 well is estimated to have more than 700 million barrels of oil and could begin producing crude by the end of the decade.
So you’ve decided you can’t cost directly any more. You approach is now to improve processes for maximum efficiency. But what excuses are you likely to meet in rolling out these processes? And what can you do to counteract them?
Through work with Operators, Service Companies & Contractors of all types both in the UK and further afield here’s STC’s ‘top excuses’ (and our most effective approaches to making them go away!):
The Baker Hughes weekly rig count has shown further promising results from Canada.
The rig estimate, which has been in force for more than 50 years, is used to show the count overall worldwide, as well as internationally and in the US and Canada.
