Wave energy company Aquamarine Power has announced plans to “significantly” downsize its business. It means an undisclosed number of jobs will be lost. According to CEO, John Malcolm, “this will involve retaining a core operational and management team to run the business and continue maintaining our Oyster 800 wave machine at the European Marine Energy Centre in Orkney”.
Official figures show that North Sea tax receipts are predicted to fall by 40% over the course of this year. The Office for Budget Responsibility (OBR) said revenues to the Treasury would drop to £2.8billion by the end of 2014/15, which is 0.9% lower than was forecast at the Budget in May. The independent body also said that tax to the Exchequer from the North Sea would be £1.6 billion lower in 2015-16 than was predicted in March, with “smaller reductions” due in later years.
Oh well, the North Sea is being kept on tenterhooks for a few more hours, with Treasury first secretary Danny Alexander scheduled to deliver the supposed main news today tomorrow. All chancellor Osborne was prepared to do was trail a few crumbs without even mentioning the North Sea fiscal review, let alone whether it will be the cornerstone of the Alexander delivery, though it of course will be. Just three measures were mentioned in his Autumn Statement address: “I can tell the house today that we will go ahead with an immediate reduction in the rate of the supplementary charge from 32% to 30%, we will expand the ring-fenced expenditure supplement from six to 10 years and we’re introducing with immediate effect a new cluster area allowance.”
Chancellor George Osborne has confirmed that he will cut North Sea oil and gas taxes. He pledged to reduce the supplementary charge from 32% to 30%, expand the ring-fenced expenditure supplement from six to 10 years, and introduce a new cluster area allowance. The UK Government insisted that the changes would trigger billions of pounds of investment in the North Sea and create thousands of new jobs. The cut in the supplementary charge represents a partial climb-down by the chancellor, who infamously almost wiped out investment at a stroke when he hiked it from 20% to 32% without consultation in 2011.
The FTSE 100 bounced back yesterday as stronger commodity stocks helped it more than recover the ground lost in a 1% decline over the previous session. The rebound came as the price of Brent crude rose to $71 a barrel, having slumped to a five-year low close to $67 on Monday after Opec ministers failed to cut production.
Heard the one about Vladimir Putin, the oil price and the ruble’s value against the dollar? They will all hit 63 next year. That’s the joke doing the rounds of the Kremlin as the Russian government digs in to weather international sanctions over the conflict in Ukraine. According to at least five people close to Putin, pressure from the US and Europe is galvanizing Russians to withstand a siege on their economy. The black humor is part of an image of defiance not seen since the Cold War. As the economy enters its first recession in more than five years, the ruble depreciates to records and money exits the country, Putin’s supporters are closing ranks and say he’s sure to run for another six-year term in 2018.
We all need to remember, but often choose to forget, that the oil & gas exploration and production is a highly cyclical business. There have been seven significant price cycles since 1970 and also a few minor ones between times, so yet another should come as no surprise. The real surprise is that no one ever seems to build the probability into their business planning! The reasons for the fall in Brent crude prices from $115 in June to below $71 following November’s OPEC meeting are well documented, as is the realisation that Saudi Arabia is now defending market share, rather than a minimum price.
The plunging oil price is giving an unexpected lift to Europe’s crisis-battered southern periphery as decreasing fuel costs help spur demand. Spain, Europe’s fourth-largest economy, could add as much as 1 percent to annual growth with oil prices between $80-90 a barrel, the government said. Italy, which is in its fourth year of recession, stands to boost GDP 0.3% points with a sustained $10 oil price drop, according to BNP Paribas SA. “There’s no doubt lower oil prices will act as a stimulus to growth in the region,” Frederik Ducrozet, a Paris-based economist at Credit Agricole, said. “Greece, Spain, Portugal and Italy would be clear beneficiaries.”
Eyebrows were raised after it emerged that the incoming chairman of the new oil and gas regulator would enjoy a £100,000 pay packet for a job that requires just 2.5 days a week work. The Oil and Gas Authority (OGA), formed on the recommendation of the Wood Review, is on the hunt for a chairman or woman after it recruited former BG Group boss Andy Samuel as its new chief executive. Mr Samuel, who takes up his new job on January 1, will be paid £250,000 per year.
The UK Government has rejected a call from MPs for an independent study into North Sea helicopter safety. Louise Ellman, the chairwoman of the transport select committee at Westminster, wrote to ministers last month asking them to order research assessing any safety improvements and on-going issues in the sector. The move followed the publication of the committee’s report into a series of recent helicopter crashes in the North Sea.
Last month, I wrote about how the drop in the oil price will require operators in the UKCS to consider more carefully how they collaborate with each other. Operators should equally be considering how a continued period of low oil price will affect their relationships with contractors in the oil and gas supply chain. The UK Oil and Gas Industrial Strategy published in March 2013 identified the vital contribution of supply chain contractors to the continued development of the UKCS both through working with operators to enhance performance and efficiency and through the development of new technologies.
The Russian government has acknowledged that the country will fall into recession next year, battered by the combination of Western sanctions and a plunge in the price of its oil exports. The news caused the stock market to drop and pushed the ruble to a fresh record low against the dollar. The economic development ministry today revised its GDP forecast for 2015 from growth of 1.2% to a drop of 0.8%. Russian households are expected to take hit, with disposable income seen declining by 2.8% against the previously expected 0.4% growth.
The UK oil industry, after chafing at suggestions it’s subsidized by the state, wants Chancellor of the Exchequer George Osborne to help save it from the market’s crashing prices. Osborne’s Autumn statement tomorrow, setting out tax and spending policies, is a chance for the more than 500 companies represented by Britain’s oil lobby to press for what it says is a fairer deal. In a letter sent to the chancellor last month, Oil & Gas UK said the collapse in prices comes on top of a 26% jump in unit costs for the industry last year alone. “Expect news on how the government will look to shore up investment in the North Sea,” said Sanjeev Bahl, Numis Securities Ltd.’s director of oil and gas equity research.
An offshore worker was airlifted to hospital last night after falling on a North Sea platform. The 64-year-old man is believed to have fallen from a ladder aboard TAQA's Eider platform, 112 miles north-east of Shetland, at 10pm.
West Texas Intermediate crude fell, trimming the biggest rally since August 2012 as investors weighed OPEC’s decision to let the market curb a global supply glut. Brent slid in London. Futures dropped 0.7% in New York, decreasing for the fifth time in six days. The Organization of Petroleum Exporting Countries may hold an emergency meeting in the first quarter of next year, Venezuela’s Foreign Minister Rafael Ramirez said in an interview. The group’s failure to cut output at a gathering last week bodes well for US producers, according to billionaire wildcatter Harold Hamm, a founding father of the nation’s shale boom.
It is worthwhile taking a moment to marvel at the built environment around you – houses, shops, offices, factories, hospitals, roads, railways, airports, cars, aeroplanes and so forth – and to then realise that virtually ALL of this was built using energy from fossil fuels – oil, natural gas and coal. At the same time fossil fuels provide virtually ALL of the energy that flows through our society, enabling economic activity and the creation of wealth. Fossil fuels are heavily taxed at every stage of their production and use. The economic activity they enable is taxed as well creating vast revenue streams that pay for education, defence, healthcare, welfare and pensions.
A future where electricity comes mostly from low-carbon sources is not only feasible in terms of material demand, but will significantly reduce air pollution, it is claimed. An international team led by Edgar Hertwich and Thomas Gibon from the Norwegian University of Science and Technology (NTNU) have conducted what is said to be the first-ever global comprehensive life cycle assessment of the long-term, wide-scale implementation of electricity generation from renewable resources. The study has assembled and scaled up the assessment of individual technologies to the whole world and assessed technology implementation to 2050, taking the environmental impacts of production into account.
Marathon oil has made a discovery at its Harir Block in the Kurdistan region of Iraq. The company said it had hit oil and gas in its Jisik-1 exploration well. The site, 40 miles northeast of Erbil, was drilled to a total depth of 15,000 feet and oil and gas was noted in an extensive gross interval in both the Jurassic and Triassic reservoirs.
The decline in oil prices could have a substantial adverse effect on the oil and gas industry in the UKCS (UK continental shelf) a leading industry expert has warned. Research by Professor Alex Kemp and Linda Stephen from the Aberdeen University has found that if the current drop in price continues, there will be reduced investment and production. Using economic modelling, the pair highlighted two scenarios which reflect investment screening prices.
An Austrian energy group has drawn its first oil from a drilling campaign in New Zealand. OMV said that well MR-8A, which is part of the Maari redevelopment drilling campaign, has an estimated production capacity of 4,500 barrels of oil per day. The firm will invest €205million in the campaign which has five drills producing new reservoirs.
Statoil has completed its deal with German oil and gas company Wintershall to exit two assets in the Norwegian continental shelf (NCS). The transaction involves a farm down in Aasta Hansteen, Asterix and Polarled as well as signing over its assets in the non-core Vega and Gjoa fields. Statoil said it would allow it to redeploy around $1.8billion of capital expenditure from now until the end of 2020.
Incredible footage has emerged of a lightning strike offshore. The short video, which was captured last month, shows a massive electric discharge hitting the water from above. Watch the amazing clip below.
Electromagnetic Services (EMGS) has struck an $8million deal with an international oil company. The contract will see EMGS provide 3D EM data from its multi-client data library in the Barents Sea. The company said the data will be delivered in the fourth quarter this year, with the firm booking $4.5million after the partner's share of revenues.
According to CanOils’ new report The Canadian Oil Sands Outlook 2015 the Canadian oil sands industry looks set to have capacity to produce over 3million barrels per day by the end of next year, with production likely to approach 2.5million bpd. Of these figures, a higher portion than ever will be controlled by non-Canadian operators, with the trend of greater influence year-on-year by internationally-held companies continuing into the coming year. Assuming all scheduled new projects and expansions actually come onstream by December 31, next year will see a 16.6% increase in overall production capacity compared with this year.
Last month at PETEX in London, the hunt for shale gas resources in the UK was a hot topic and among the companies offering their expertise and wares at the show was CGG, currently being stalked by fellow French group Technip, and US energy services giant Baker Hughes, which arch rival Halliburton ha made a $35billion bid for. While companies such as these cannot easily answer the social and political questions, or indeed even wish to engage that way, they can contribute to the debate on technical feasibility and potential. And both Baker and CGG are well equipped to do this. Firstly, and according to CGG, we in Europe and not just the UK have the opportunity to benefit from the latest developments in North America. Integrated workflows, which bring together a broad range of geoscience data, have shown great potential for the comprehensive reservoir characterisation required to optimise drilling and completion activities in heterogeneous unconventional resource plays.