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Insights

Opinion

Bob Keiller: The road not taken and why I chose to abandon my dream as an artist

In 1980, I sat on a summer bench with my friend Jimmy Steele. We talked about the future, our options, our hopes and our dreams. He had already left school and was studying civil engineering at Paisley Technical College, which was just outside of Glasgow, Scotland. I was about to enter my fifth, and hopefully final, year at school. "So what are you going to do after leaving school?" he asked. I told him art was my favourite subject, so I hoped to go to art college to study graphic art design. I wanted to become an illustrator of book covers and, more importantly, of album covers for the music industry. I was really into music! I had ideas for fantastic landscapes and creatures that I felt would bring the covers and records to life — striking text and colourful fonts — all airbrushed and painted by hand. I imagined I would design dragons and angels, princes and thieves, lovers and rockers. Jimmy cautioned me that the creative arts field is a tough industry to break into, that talent alone may not be enough. He said I might be better off to consider a more solid career option with better job prospects, even as a safety net or a fall back option. “A trade to fall back on” was how he put it. I thought hard about it. The two roads diverged, and at the time, I was sorry I could not travel both.

Opinion

Opinion: The winners and losers of the Halliburton, Baker Hughes deal

Notwithstanding the regulatory hurdles still to overcome, it’s already time to pick the winners and losers of this $35billion marriage. The certain winners are my learned friends, the lawyers, not least amongst them Baker Botts. Congratulations to them. However, first off for the strategy session should be Schlumberger. Whilst its turnover will potentially be eclipsed (reportedly $51.8billion v $45.3billion) size isn’t everything (as my friends at Baker Botts would tell you). Whilst it might take the shine off a few egos, being the underdog in the current climate isn’t a bad place to be. Turnover is vanity, profit is sanity. Whilst this month’s massive union story will no doubt attract lots of profile during the engagement, the honeymoon may be short. A competitor disappearing may well be good news for the likes of Schlumberger. Two that are absorbed by compliance and ominous internal restructuring looks like an early Christmas present. Schlumberger may even keep its turnover crown, depending on what businesses Halliburton may be forced to sell to satisfy competition regulators (more work for the lawyers).

Opinion

Opinion: Falling oil prices sparks industry restructuring

Almost in line with falling global oil prices share value of oilfield service companies have slumped by around 25% over the past four months. These are the same companies that have benefited greatly from the US fracking boom that transformed the standing of the US as an oil and gas producer; its position as number one oil consumer has never been at risk. But the halcyon days of unfettered profits for US frackers and service companies look to be over.

Opinion

Loren Steffy: Using real-time data to prevent blowouts offshore

Imagine two airplanes flying toward each other on a collision course. In the modern world of commercial aviation, two planes with conflicting flight paths would trigger alarms in in the air traffic control tower. That’s because the safety of commercial aviation relies on the use of real-time data to avert disasters. The same can’t be said for the offshore oil industry. Four and a half years after BP’s Macondo disaster in the Gulf of Mexico, the industry remains reluctant to use drilling data it collects from rigs to enhance safety.

Opinion

Opinion: Les Linklater – The party isn’t over

We’ve all been to one of those parties. It starts quietly with a handful of people and before too long, everything just seems to take off. Everyone who is anyone is there. Drinks are flowing, connections are made, news is exchanged. It’s busy and bustling. New friends seem like old friends and you can’t imagine life – and the next party – without them. Could this be the greatest party ever?

Opinion

Opinion: Jeremy Cresswell – You reap what you sow

Anyone connected with the North Sea is bound to know that oil prices have been sliding since the summer. As I write this, Brent is hovering just above $80 and there are predictions that it could drop into the $70a range and possibly down another level to around $65. Jobs are being shed and BP has embarked on a cast-cutting drive as are other operators, notably Chevron and Shell. Given the timing of the BP announcement this week, it smacks of oil price knee-jerk, rather than the cost reduction imperative spelled out in the Wood Review. Contractors like Wood Group PSN started the process months ago, the primary target than apparently being the one-man band contractors ... otherwise known as the IR35 brigade. That has a strategic Wood Review ring to it.

Features

Shell acts on industry’s skills crisis

Amid the growing need for skilled workers in the engineering industry, Shell has confirmed its investment in a programme aimed to inspire the next generation. Tomorrow's Engineers, run by Engineering UK, aims to tackle the skills crisis by encouraging and inspiring more students to study, and pursue, a career in science, technology, engineering or maths.

Opinion

Opinion: A fund for human capital

The proposal from the Department of Energy and Climate Change (DECC) to establish a sovereign wealth fund based on future revenues from the extraction of shale gas, is, in principle a good idea. Many countries now have such a fund, turning current oil and gas revenues into a national asset for the long term. Norway's fund is most often quoted as an example; another lesser known example is the state of Texas in the US which has such a fund for its universities. The details of the proposal from DECC are yet to be released so its final shape and impact is unknown. Given the size of the UK economy, and our budget deficit, the idea that we can build a large financial fund of the type enjoyed by Norway is unrealistic. However, I would argue that there is still a great deal that could be done with a shale gas fund. Most sovereign wealth funds build financial capital taking revenues from the oil and gas industry and investing them in the stock exchange. I would propose DECC consider a fund for human capital, not financial capital.

Opinion

Opinion: Lessons from Norway

Most countries in Europe look on Norway with envy. As the UK and other European countries struggle with reducing public spending, Norway benefits from a sovereign wealth fund worth around £500 billion. It has wisely invested the income from its oil and gas reserves, with its fund considered by many to be the world’s largest.

Opinion

Opinion: 2015 – A year for energy entrepreneurs

2015 is going to be a fantastic year for some individuals in this industry. Big corporates’ profits are falling and their fixed costs are huge. Business leaders are struggling to rise to the challenge. Internal communications may be absent or demotivating. Control predictably will become more centralised at HQ. Local service standards will be under pressure. Entrepreneurial middle managers want better for themselves, their teams and their customers. Opportunity knocks. When budgets are cut without differentiation (let alone consultation), and jobs appear vulnerable (notwithstanding the percentages shed are actually tiny) entrepreneurs sense an opportunity. The market may shrink but that doesn’t mean there is not room for new suppliers. Customers’ profits are under pressure too. They want cost savings. They want innovation. They want added value. Their loyalties are with individuals. People buy from people. We like an underdog, particularly one that we have worked with for years, is light on their feet and who can now offer more for less.

Opinion

Opinion: Can Kenya break the mould?

For a country whose economy relies mainly on tourism and tea, the discovery of oil is one of the most exciting things to happen in development terms in the history of this East African nation.  The ability of a sub-Saharan country to be self-sufficient in energy has the potential to become an engine for economic development beyond anything seen in the area over the last 100 years. Clearly there are challenges, both to the extraction and the geopolitical sensitivity of the find. Kenya’s Lokichar Basin lies on the border with South Sudan, and it was its neighbour’s oil reserves that drove the civil war and recent independence of the South Sudan state from its mother country. Clearly there are security risks, with this part of the coastline being party to raids from Somali pirates and terrorist cells – not to mention the potential for unrest in neighbouring countries, as they eye up such a large natural resource. This year, oil was also discovered offshore from Kenya – again causing security concerns, with similar risks from marauding Somali pirates.

Opinion

Opinion: Signs point upward for investment

UK Offshore Licensing Rounds attract attention and the government settled into a routine of offering ‘car boot sales’ and then saying that the latest offering has attracted even greater interest than before. And so, when energy minister for the time being, Matthew Hancock, yesterday took the wraps off who is being provisionally offered what is the 28th Round, the predictable words were trotted out: “This successful licensing round, which is on track to be one of biggest rounds ever in five decades, is a boost for the UK economy and shows that our long-term economic plan is working.” How come certain big American brands are looking to exit and are virtually absent as bidders? How come practically everything on the UKCS is for sale; in large measure because of a fiscal regime long past its sell-by date and the penchant for Treasury to treat the North Sea as a milch cow? That said, there is quite a bit of interest as companies look to the future.

Opinion

Opinion: After the Referendum – give real energy powers to Scotland

Energy was political and economic dynamite, and a key battleground on which the independence debate had been fought. Following the outcome of the referendum there is now some agreement that Scotland should have a much stronger voice when it comes to energy policy. In this short article we explore the conundrum between renewables and nuclear power, and consider further what new powers for Scotland the Smith Commission might consider. Working to a tight deadline the Smith Commission intends to produce a set of proposals covering financial, welfare and taxation powers by the end of November 2014. The renewables versus nuclear conundrum Westminster has promised some big new powers for the Scottish Parliament, but there appears to be little agreement on how to close the policy gap between Holyrood and Westminster on renewables and nuclear power. Where are the proposals to give the Scottish Government some influence on how to spend incentives for renewable energy? At the moment, when it comes to financing, Westminster has the power to decide what it wants, regardless of what the Scottish Government thinks. It is now clear that Westminster is planning to spend a lot of money on building nuclear power stations after 2020, and the Conservative Party has stated that it will stop incentives for onshore wind. So where does this leave a Scottish Government which opposes building new nuclear power stations and which wants some ability to make its decisions on what renewables should be supported rather than being dictated to by Westminster based Conservatives? Many Conservative MPs are sympathetic to the aims of anti-windfarm groups like the Renewable Energy Foundation (REF). The REF say that Scottish consumers ought to pay more for renewables deployed in Scotland. Well in that case, why should Scottish consumers pay for nuclear power stations in England and Wales?

Opinion

Opinion: The vitally important ‘damp squib’

September 18 has been and gone and now we are less than a month from another critical political event. On December 3, George Osborne will undertake his Autumn Statement - often a damp squib, but this year vitally important. The contents of the speech could have wide-reaching impacts for the North-east of Scotland and England, East Anglia and a number of other UK regions. However, in the short-term it will have the most impact offshore in the UKCS. We’ve spoken with our members and the view is clear, the Chancellor has to make a positive announcement on the fiscal regime in the UKCS in four weeks’ time. Operators tell us the UKCS fiscal regime is unpredictable, unnecessarily complex and simply too burdensome. The North-east asks are clear - we want a reduction in the headline rate of tax in the UKCS, we want exploration to be made more attractive, we want allowances to be simplified. However, these asks are not parochial as they are important for the rest of the UK too.

Opinion

Opinion: Iraq . . . a nightmare with no clear end in sight

Iraq is now more violent than at any time since the bloody 2006-2007 insurgency period. The country experienced an average of almost 80 violent incidents a day between July and September. Hundreds, possibly even thousands of people are being killed every month and there are no signs that the conflict will rescind in the near future. As violence continues to rage, the energy sector remains concerned with developments affecting Kurdish Regional Government (KRG) territory, as well as oilfields in the south. International military assistance has bolstered the position of the Kurds and for now, this will act as a major safeguard for the region's interests.

All News

Shell invests £1million to bridge skills gap

Oil giant Shell has invested £1million in a programme aimed at helping address the UK’s critical shortage of scientists and engineers. The Perkins Review of Engineering Skills, published last year, called for urgent action from employers to address this shortage. Shell’s three-year funding, which has been invested in the Tomorrow’s Engineer’s Programme, will enable the programme to expand into more than 500 new schools across the UK.

All News

Industry Trailblazers: Siberia’s calling

Speeding down the runway at 160mph, Divya Reddy was leaving everything she ever knew – her family, her home, the only country she had ever lived in. At an age when most young women are off fulfilling gap years or just starting to consider which career path they should embark upon, Divya was on her way to one of the most remote parts of the world to work long hours in unforgiving conditions. For the India native, the assignment wasn’t forced. Instead the young Shell engineer graduate volunteered for the post in Siberia, hoping it would give her the kind of industry exposure she could only dream of. It was a move that would later see her scoop the Young Asian Woman of Achievement award and become one of Shell’s youngest ever subsurface field leads.

Opinion

Opinion: Will falling oil prices compound activity decline in the UKCS?

At the time of writing this article, the Brent crude oil price benchmark had fallen to $85 from $115 in June on concerns of abundant global oil supply and weakening demand. Goldman Sachs, the international investment bank, earlier in the week released a price prediction of $80 for 2015 having reduced this from $100 previously. Markets are spooked and bearish sentiment is plaguing the energy sector. Concerns are that the cost and operational challenges we have witnessed in 2014 in the UKCS, compounded with commodity price reductions, could spell a difficult time for investment and activity in our home market.

Features

15 killed as Iraqi officials recapture Sunni oil town

A series of bomb attacks which targeted markets near Baghdad have killed at least 15 people, Iraqi officials said as security forces recaptured parts of a strategic Sunni oil town north of the capital from Islamic State militants. Iraq is embroiled in its worst crisis since the 2011 withdrawal of US troops in the wake of a blitz this year by the Sunni militant Islamic State group, which has seized a third of the country’s territory. After heavy fighting overnight, Iraqi security forces backed by Shiite volunteers managed to push into the strategic oil town of Beiji today, taking control of some of the town’s southern districts, according to officials.

Features

Calling all ‘Young Energy’ students

Oil and gas students have one final chance to enter into an industry wide competition and meet Scottish Energy Minister Fergus Ewing and more than 150 senior representative from across the industry. In the run up to skills week Opito has been engaging with people across the industry by giving them the chance to submit a photo with the caption #Iamoilandgas when posting a photo on Facebook or Twitter.

Opinion

Opinion: Is Union a dirty word?

Union: The action of joining together or the fact of being joined together, especially in a political context. Sound familiar? However, in the oil and gas sector definition and connotation don’t always necessarily mean the same thing. Say the word “union” in certain institutions and it’s like issuing a coded signal to batten down the hatches and guard the negotiating table. For some hardened HRs their first interaction with a union could have come in the late 70s, where a strike by offshore catering staff saw hundreds of workers participate in a mass walkout affecting dozens of installations. Or maybe they were there in the early 90s when offshore contract workers were flown off platforms for participating in wildcat strike action.

Features

Opinion: MP Louise Ellman – Wrong signal on safety critical question

Ministers have rejected the Transport Committee’s call for a full, independent, public inquiry into the safety of helicopters used in the offshore industry. Louise Ellman MP, chair of the committee explains their disappointment. Just over a year ago four passengers died when a helicopter crashed off the coast of Sumburgh, Shetland – the fifth such accident since 2009 involving the transfer of oil and gas industry personnel to or from offshore installations in the North Sea.