A UK North Sea expert has predicted a bright future for the north-east oil and gas industry, despite declining production.
Dave Blackwood, a senior adviser in Aberdeen with independent corporate-finance firm Lexicon Partners, was speaking last night at a reception held by the company in the city.
He said that, to measure the overall health of the business in the basin, people had to get past the obsession with headline production as the sole measure of success.
Mr Blackwood, a former head of BP’s North Sea operation based in Aberdeen, added: “There is real activity and growth in both exploration and production and in the service sector.
“The number of operators and the number of service companies, from very small to very large, continues to increase, exports of goods and services from the North Sea continue to increase, employment is still static or mildly increasing in the middle of the worst recession in generations.”
Mr Blackwood said billions of pounds would be invested in the North Sea in the years to come to bring new fields on stream.
He said this oil and gas would be produced by a different mix of companies from today, including some current North Sea operators and some new entrants to the basin.
He added: “It will be produced in part using technologies not yet developed, in some cases by companies that don’t exist today.
“It will require this industry to re-invent itself, as it has done a few times already through oil price peaks and troughs and technological challenges.”
Mr Blackwood told the gathering in the Marcliffe Hotel that a mix of operators was needed in the UK North Sea, adding: “The smaller companies simply cannot do what the majors did in the North Sea: developed the breakthrough technologies, took the big risks and, as a result, opened up a globally significant hydrocarbon province.”
He said some of the new entrants could do “late-life” investment better than the majors, however, adding: “There are still some big bets and some big investments to be made in the North Sea, so there’s room for everyone, and I am personally in a camp that says hang on to the majors for as long as you can as they tend to have bigger pockets, and the health of the basin is all about capital investment.
“Equally, some of the best companies to drive the future are those who are unencumbered by the past, so we need the new players as well.”
Lexicon Partners said in March it was building a team in Aberdeen and had recruited Mr Blackwood. His hiring was the first step in its plan to develop a group of advisers locally to work closely with its core London-based team.
Lexicon managing director David Waring said last night that the firm was opening an office in the Granite City’s Carden Place.
