By Professor Peter Strachan and Professor Alex Russell
Amber Rudd the Tory Government’s new Secretary of State for Energy and Climate Change has made it clear she intends to make substantial changes to onshore wind financial support schemes in compliance with her party’s manifesto pledge to end “new public subsidy” for renewable wind power generation.
There may be some public support for this move if it is perceived as an attempt to create a level playing field for providers of energy, which would indeed be an admirable ambition.
But in reality such a policy change almost beggars belief. Perhaps the only great achievement of the late UK coalition government, with a huge amount of support from Holyrood, has been the successful deployment of onshore wind power generation; the achievement of renewable energy targets in Scotland is testimony to this success.
It is almost exactly two years since the Offshore Safety Directive 2013 (the Directive) was adopted by the EU, a move which stems from the European Commission’s concern following the Deepwater Horizon incident in April 2010 that the existing regulatory framework for offshore safety in the EU was “divergent and fragmented”.
Further, the Commission was concerned that it did not provide adequate assurance that risks from offshore accidents were minimised throughout the Union. As a result, the Directive now includes requirements on member states to ensure that operators of existing and future offshore oil & gas operations in the EU are appointed by licensees or licensing authorities.
They must also take all suitable measures to prevent major accidents in offshore oil & gas operations and prepare safety documents, including emergency response plans, corporate accident prevention policies and safety and environmental management system documents, and submit them to the relevant national competent authority.
This week's most read story on Energy Voice was Bob Keiller's editorial discussing the future of oil price alongside another penned by Jeremy Cresswell.
An ageing asset doesn’t mean unmanageable, unprofitable and inoperable.
There is still potential to be realised from the UK Continental Shelf (UKCS), despite the challenges of the current climate. In terms of oil alone, it is estimated that there are around 25billion barrels to be recovered.
Global demand for energy continues to escalate and fossil fuels will carry on contributing to the mix.
The UK Government is also committed to supporting the sector, as we have seen from the prior administration’s positive response to Sir Ian Wood’s 2014 state of the industry report.
Continuing to offer robust staff training programmes throughout the industry downturn may not seem like a top priority.
However, my team certainly challenged me on my decision to slow down our training offer.
It felt like the right thing to do at the time.
But was it the best approach?
There was probably much searching of “Who’s Who?” last month when Amber Rudd was anointed as secretary of state at DECC and Andrea Leadsom emerged as energy minister in the same department.
The first slight surprise was that the department still existed. With the Liberal Democrats having committed hari-kari, it would not have been a surprise if energy and the green bits which surround it were reunited with the world of business and enterprise at 1 Victoria Street.
Ms Rudd is an Edinburgh University graduate, a banker and clearly has been on a bit of a fast track in government, as PPS (parliamentary private secretary) to the chancellor of the exchequer and latterly as a junior minister in DECC.
Indeed, it is a CV which suggests competence and ambition.
On any given day, you can download multiple financial forecasts of future prices for almost everything from shares in individual companies to the price of wheat, coffee or oil.
I am really interested in the expected future price of oil because my company does most of our work in the oil and gas industry.
If you read the analysts’ views on the oil price and the rationale behind their forecasts, they all sound credible. In fact, they always have, yet they have often been wrong.
Few forecasters predicted the sudden oil price swings up or down over the last few decades, and none of them predicted the collapse in price in the last few months. Today, they can all point to the reasons why it happened and show how obvious it was, so obvious that none of them foresaw it.
In the week before the general election on May 8, a “weel kent” and highly respected financial newspaper reported that our friends in Norway have earned more in the last quarter from their “oil fund” than the Norwegian government had actually spent.
By any measure this is an astounding achievement and is testament to the Norwegian’s intelligent and strategic decision to set up the fund in the first place.
Interestingly though, this event wasn’t to my knowledge reported elsewhere in the media and it certainly didn’t make it on to the mainstream television news.
Perhaps though, that’s not surprising because, of course, although it may not be repeatable every quarter, it would have reflected very badly on all those unionist politicians who have worked so hard over the past few decades to deny Scotland the financial security that Norway has now so brilliantly achieved.
I’m thinking that this commentary could end up irritating some of the UK offshore industry’s leadership. If that is the case then so be it; but there’s a lot about the North Sea oil & gas industry that’s worrying one helluva lot of people whose lives hinge on its health.
Some 5,000 jobs gone, it is said; thousands more to go, it is said too.
My first concern . . . beef if you like . . . concerns just how much of the UKCS production capacity is rendered non-viable by basement oil prices.
And the reason is that I seem to be hearing different numbers from different people, all of whom appear to claim to quote Oil & Gas UK’s latest dataset, viz the 2015 Activity Survey.
By Lena Wilson, chief executive of Scottish Enterprise and chairman of the Energy Jobs Taskforce
We’re all acutely aware of the challenges which face the oil and gas sector right now – many of you reading this article will be either directly or indirectly affected by the marked and sudden reduction in the oil price and the subsequent impact on the sector.
We estimate that over 5,000 jobs have been announced as being lost or at risk. While we know that the oil price fall has brought the sector into sharp focus, the current situation is as much about regeneration and readjusting our cost base.
That’s why in January this year Scotland’s First Minister, Nicola Sturgeon, announced the creation of a taskforce to help tackle not just the immediate impact of the volatile oil price but also the pressing need for the industry to evolve, transform and modernise.
The story which sparked the most interest with Energy Voice readers this week was the news of BP placing North Sea operation staff on an equal time rota.
The oil giant will now move to a three on, three off shift pattern.
The move, which is also being considered by a number of other companies including Talisman and EnQuest, was announced to employees earlier this week.
As the latest survey goes live on Energy Voice, we've collected the first findings from the project, which were revealed at OTC 2015.
Energy Voice has called on the global energy sector to participate in the second part of its landmark research launched to mark 50 years of oil and gas exploration in the North Sea.
The project is a response to falling oil prices, which placed the UK and wider global energy market under pressure.
This week Subsea 7 revealed it would be reducing its headcount by 2,500 in total in the next year.
The move will see initial changes in both Aberdeen, London and Norway.
With 410 positions are expected to go in the UK.
Meanwhile in Norway up to 210 positions will go.
This infographic shows the price of a tank of petrol versus the average salary worldwide.
The data reveals both North America, the UK and Scandinavian countries fair the best when it comes to cost whereas regions including Afghanistan, Ethiopia and Egypt suffer from a small margin between income and petrol cost.
If 14 frogs sat on a log and three decided to jump into the water, how many would be left?
I know what you’re thinking – 11. It’s simple arithmetic, right? Wrong. Read the question again.
They decide to jump in; but the question doesn’t say they actually jump. So there are still 14 on the log. After all, there’s a big difference between our intentions and our actions.
I don’t know how many of you have noticed, but women are taking over at the top of the energy hierarchy in the UK.
Whilst I’m still waiting for a female to topple various of the male-dominated fiefdoms that still rule in the boardrooms of oil majors and independents active on the UK Continental Shelf, five key trade, regulatory and government positions are now held by women.
They are Amber Rudd ... newly appointed energy secretary, Susan MacKenzie (HSE), Maria McCaffery (RenewableUK), Dr Nina Skorupska (Renewable Energy Association) and Deirdre Michie (OGUK).
This could do more than anything that has ever gone before to finally get some balance into the boardrooms and executives of the UK energy industry ... both upstream oil & gas and power generation.
The shift should be welcomed. A bit less testosterone in the UK energy sector ought to be good for us all.
The story which sparked the most interest with Energy Voice readers this week was the news of a renewables boost for Global’s Nigg Energy Park.
Tidal devices for the Meygen project in the Pentland Firth will built and tested at the site in Easter Ross.
Only two weeks after a pilot was killed during a test flight of a prototype vehicle that should one day allow paying passengers to travel briefly into space, it was fascinating to see that scientists had successfully landed a probe on a comet some 300 million miles away from Earth.
The history of space travel is marked with tragedies and illuminated by spectacular achievements.
The first manned flight into space by Yuri Gagarin in 1961, the Apollo 8 crew who first saw the dark side of the moon in 1968, and probably one of the highest points in human history when Neil Armstrong was first to set foot on the moon on 21 July 1969 just to name a few.
In 2013, it was apparent that the UK offshore industry faced three significant challenges, each posing a very serious threat if not overcome.
We had an uncompetitive tax regime, weak and ineffective regulator within the Department for Energy and Climate Change (DECC) and a cost base which was, frankly, out of control.
We at Oil & Gas UK therefore adopted as our top priority the tackling of these three very serious threats. Following much work within our organisation and across the industry and government, I think we can regard the overall situation as now improving quite considerably.
However, we are by no means out of the woods and there is one challenge on which we have not made enough progress.
Most Energy Voice readers are almost certainly too young to remember the former Prime Minister Harold Wilson or the famous speech he made at a conference in 1963 in which he effectively warned that if the country was to prosper, a “new Britain" would need to be forged in the “white heat" of the so-called “scientific revolution" that was perceived to be taking place at the time.
Wilson was right and that era certainly saw some dramatic technological developments of which the ones that stick in my mind are Concorde as well as other aircraft like the TSR2 and of course the beautiful E Type Jaguar car.
At that stage the country was seen as a global technological leader alongside the US and had even developed its own successful rocket – the Black Arrow – for satellite launching.
Sadly, of course, none of this lasted. Wilson’s aspirations were effectively killed off on the back of neoliberal economics ideology and any lead the UK had along with its huge talent were squandered.
As the Offshore Technology Conference OTC kicks off in Houston, Texas today companies in the UK oil and gas industry are turning to new technology as a way to breath fresh life into the sector during challenging conditions.
This week's most read story on Energy Voice was the news Wood Group was in consultation with its staff over a number of positions.
The company said almost 100 jobs were at risk at the service giant.
A consultation has been launched with around 380 staff, with 80 workers expected to lose their jobs.
It is anticipated a further 12 roles will go in the company’s Wood Group Kenny subsidiary.
There are various myths surrounding employee hires versus workers and vice versa – but which is the most efficient and sustainable option for the energy industry to see it through the next 50 years?
Legally, people are either ‘employees’ or ‘workers’, the latter bill the employer through an invoice for a provision of services and the former are on the payroll. There’s a myth that we have two options, ‘staff’ and ‘contract’, but there are a variety of options available and a lack of creativity in this area can create issues for businesses.
Employees are generally seen as lower cost, more loyal and, by some leaders, more productive than workers. However, in my experience, companies aren’t required to manage the quality of delivery of ‘workers’ any more than ‘employees’.
