Score Group has unveiled plans to spend around £80million on new headquarters and other buildings in its home town of Peterhead. But a further plunge in oil prices could kill off the project, the company’s owner has warned. The proposals are at an early stage and no approach has been made to Aberdeenshire Council for planning approval.
Oil workers have been evacuated from a North Sea rig after a power outage. Operator Marathon Oil said all non-essential personnel on the Brae Alpha and Bravo rigs were transferred yesterday. The field is located 155 miles north-east of Aberdeen.
The former head of BP’s Aberdeen-based North Sea operation warned yesterday the UK oil and gas industry is facing an early death unless there is swift political action to prevent it. Dave Blackwood, who retired from BP in 2009 and is currently a non-executive director with Granite-based energy service firm Expro Group, was speaking as reports in Saudi Arabia said the kingdom was prepared to increase its oil output and claim a bigger global market share, potentially putting further pressure on the UK industry after the oil price slump of recent months. Adding his voice to widespread calls for swift tax cuts for North Sea operators, Mr Blackwood said: “Nothing less than radical change will prevent the premature demise of the basin, let alone maximise economic recovery.”
Aberdeen firm Craig Group said ongoing investment in tonnage and new international bases helped drive a big jump in both profits and turnover during the year to April 30. The privately owned, family-run shipping and energy service company has just filed accounts showing pre-tax profits increased to £20.5million, from £17.3million, while turnover grew by more than £30million to £177.7million. They also highlight almost £30million of capital expenditure during the year, of which £23.3million was spent on the continued modernisation of the group’s growing fleet of emergency response and rescue vessels.
The SNP has been accused of “deceiving” voters in September’s referendum after analysis suggested an independent Scotland would have received only a fifth of the party’s oil revenue estimates. According to reports projections from the Office for Budget Responsibility (OBR) which take into account plummeting prices put oil revenues at £1.25 billion in 2016/17 - the first year of independence had Scotland voted Yes - instead of the £6.9 billion predicted by the Nationalists during the campaign. Meanwhile oil giant Shell confirmed it is to sell its share in the Sean gas field in the southern North Sea.
It goes without saying that if you work offshore, you work in a physically demanding and hazardous environment. So when the European Court of Justice rules that obesity can constitute a disability, then of course safety must come into the discussion. Before we get into things, we must remember that the EU’s judgement states that obesity is only classed as a disability in certain circumstances, not in every circumstance. It’s only a disability if the person has a long-term impairment that has been induced by their weight.
The Scottish Secretary Alistair Carmichael said he will attend a North Sea oil summit organised by Aberdeen City Council. The meeting has been called by Aberdeen City Council in response to a plunge in oil prices to just above $62 a barrel, from more than $100 in the summer. Scottish Labour pledged to send its leader, Jim Murphy, and urged both Mr Cameron and Ms Sturgeon to attend. Alistair Carmichael will attend the summit as well as the Scottish Lib Dem leader Willie Rennie.
In these interesting times we may need to look outside our usual patch to keep our people busy through 2015. But Bethlehem? OK, not exactly Bethlehem, but perhaps not far away from that little town. Israel just announced a major new gas discovery (reportedly 3.2 trillion cubic feet). While many of us were transfixed by the oil price, Israel was holding its first ever international oil and gas conference. There used to be an Israeli joke that Moses had delivered the Jews to the only place in the Middle East with no oil or gas.
Prime Minister David Cameron and First Minister Nicola Sturgeon were last night urged to attend an emergency oil and gas “summit” in Aberdeen and help save jobs as the North Sea industry struggles with low crude prices. The meeting has been called by Aberdeen City Council in response to a plunge in oil prices to just above $62 a barrel, from more than $100 in the summer. Scottish Labour pledged to send its leader, Jim Murphy, and urged both Mr Cameron and Ms Sturgeon to attend. But trade body Oil and Gas UK (OGUK) said there was no need for a knee-jerk reaction to the low oil prices, adding it was probably enough to “reflect” on them after Christmas.
A UK Government minister was under fire last night for refusing to meet the widows of the oil workers who died in the 2013 Super Puma crash. Labour MP Frank Doran said he was “extremely disappointed” Transport Secretary Patrick McLoughlin had declined an invitation to meet families and the survivors who were on-board the doomed flight. Sarah Darnley, 45, from Elgin, Gary McCrossan, 59, from Inverness, George Allison, 57, from Winchester and Duncan Munro, 46, from Bishop Auckland died when the aircraft plunged into the sea near Sumburgh in Shetland in August last year.
As we watch the oil price go down, with no indication of how low it will go or how long this trend will be sustained, it’s increasingly clear that the impact of this – alongside a double whammy of falling production levels plus cost inflation - is being keenly felt by operators across the UK Continental Shelf (UKCS). In recent weeks, we’ve seen Christmas parties cancelled, free meals curtailed and shareholder revolt on CEO pay as well as plans to cut onshore and offshore contractors pay in 2015. There is also the prospect that up to $150bn of global projects could be labelled as uneconomic next year, resulting in them being mothballed or cancelled altogether.
An offshore worker has been airlifted to hospital after being hit on the head by a falling object. The 57-year-old man was working on the Murchison platform, about 123 miles north-east of Shetland, when he was reportedly hit on the head by a falling pipe or hose. Shetland Coastguard sent a rescue helicopter to the platform, and he was airlifted to Gilbert Bain Hospital in Lerwick.
A summit which aims to bring together governments, trade unions and industry bodies to save jobs in Scotland’s oil capital has been announced. Jenny Laing, leader of Aberdeen City Council, has called on the Scottish and UK Governments to attend the summit on the North Sea oil industry which is struggling under plummeting oil prices. Labour has pledged to send its leader Jim Murphy and has urged First Minister Nicola Sturgeon and Prime Minister David Cameron to attend.
First Minister Nicola Sturgeon has been urged to reveal the Scottish Government’s assessment of the tax cut needed to save the jobs of thousands of oil workers. Scottish Labour leader Jim Murphy said the move was necessary given the “crisis” currently unfolding in the sector due to the dramatic fall in the price of a barrel of oil, which is currently less than $60. It comes as renowned economist Prof Ronald MacDonald, of Glasgow University, said a fall to below $40 a barrel was “not unreasonable”.
There is no doubt that the oil and gas sector is facing challenging times – on-going cost pressures and the fall in oil prices are reducing margins for both operators and supply-chain companies, and it is important that Government does everything it can to support the industry during this period. I believe that North Sea oil is a fantastic asset for Scotland and will continue to be so be for decades to come. There are up to 24 billion barrels of oil and gas equivalent remaining, and it is essential that we have stable and proportionate fiscal regime which encourages the investment, innovation and exploration required. This is even more important in light of the recent job losses in the sector.
I read with real concern the comments yesterday that the UK offshore oil & gas industry was “close to collapse”. These comments are over the top for an industry which thinks and plans long term, has significant momentum from current production and from major investments made over the last two or three years, and where the operators make their investment decisions based on the anticipated price of oil in two to three years’ time. It’s important to have a balanced perspective at this time. The UKCS does face a very difficult year to 18 months which will see a slow down in investment, the loss of some offshore production, up to 10%, and the possible loss of around 15,000 jobs within an industry which employs 375,000, although this is difficult to estimate. It will be a tough time for the industry and the people that work in it, but we are entering a downturn from which we will recover.
There is no doubt these are worrying times for the North East of Scotland. Not just for those in the industry but also for the businesses and jobs that rely on what the oil industry does for the local economy. But the North East of Scotland has seen many a storm before, and weathered them all. With the support of the new Oil and Gas Authority, and the UK Government – particularly the tax breaks which I have implemented at the Treasury – we can certainly weather this one, and even emerge stronger and more resilient. That’s not to say that the fall in oil price to below $60 a barrel is not troubling. Oil and Gas UK’s figures suggest that only about 10% of projects are unprofitable at this level, but that’s still 10% of an industry that employs around 240,000 people across the supply chain. I know that a lot of people reading this today are genuinely worried about the future.
North Sea oil production slumped by nearly 11% in the third quarter of 2014. New figures showing the sharp drop in output coincide with growing fears about low oil prices and their impact on the future of the offshore industry. One expert has warned the offshore sector is “close to collapse” because of the current low Brent oil prices, which yesterday rose slightly to about $62 per barrel.
The UK Government moves like lightning to tax the industry when oil prices are high but moves at a snail’s pace when oil prices are low. In a glaring example of oil tax hypocrisy, George Osborne announced a shale oil fund for the north of England in his Autumn Statement. This is before a single barrel of oil has been produced, yet, Scotland, with more than 40 billion barrels of oil is still waiting.
The big economic development this year was one which no economic forecaster had predicted – a dramatic drop in the crude oil price. Brent crude has fallen around $50/barrel from the average price in 2011-13. The most significant impact so far has been on Russia and the value of the rouble. The other very large oil producers in the world – Saudi Arabia and the United States – should be less heavily affected. The US is a net oil importer so consumers will gain more than producers lose. Saudi Arabia has very strong financial reserves to weather the storm.
Oil and gas expert Alex Kemp said he did not agree with comments made which claimed the North Sea was “close to collapse”. Robin Allan, chairman of the independent explorers association Brindex, said it is “almost impossible to make money” with the oil price below $60 a barrel. However Mr Kemp said the current investment in new fields had been predicted to lessen when oil prices were at $90 a barrel.
Oil and gas firms may have to charter boats or hire bigger helicopters to accommodate overweight workers after the European Court of Justice (ECJ) decided obese people can be classed as disabled. Businesses are being warned to expect widespread and expensive consequences after law chiefs in Luxembourg ruled that being overweight qualifies as a disability. The judgment follows the sacking of Karsten Kaltoft, a 25-stone childminder from Denmark.
Wintershall has estimated a further 40million barrels of oil could be recovered from the Maria field in Norway. The company said the planned recoverable resources will reach about 180 million barrels of oil in total. Previous estimates had been around 140 million barrels. It said the new assumptions are the result of extensive laboratory tests and studies as well as model calculations.
North Sea “close to collapse” says the man from Brindex. I am of course referring to remarks made to the BBC by its chairman Robin Allan, who then goes on to say that the UK’s offshore industry has been in such territory before. The 1986 oil price crash was a shocking event and did terrible damage at the time. However, it also marked the start of a turning point as the North Sea gradually started to mature. Various initiatives in the 1990s designed to tackle key issues like rocketing costs helped and they were timely given the next slump that started with a gradual oil price slide in 1997, bottoming out in late 1998 at less than $10 a barrel for a few days.
The UK’s oil industry is “close to collapse” but the falling oil price could have a net benefit to the UK economy, according to experts. Robin Allan, chairman of the independent explorers’ association Brindex, said it is “almost impossible to make money” with the oil price below 60 US dollars (£38) a barrel and there will be no new investments. But accountants PricewaterhouseCoopers (PwC) said the falling oil price “should be a net benefit to our economy as a whole, even if there is some losers in the UK oil and gas sector and in particular places like Aberdeen”.