The North Sea: A Long Future Ahead
It is often said that Aberdeen is the one city in the United Kingdom that is never in recession, no matter what the wider economic situation might be. Aberdeen, of course, is the UK’s largest base for the oil and gas sector, with the North Sea providing plenty of employment for a wide variety of engineers, technicians, geologists, geophysicists and other professionals who are all needed to make the UK offshore energy sector work.
In spite of this, much of the UK population seems to be unaware of the benefits the oil and gas sector provides – a fact highlighted by the April 2013 launch of the “Energising the Nation’s Future” campaign by Oil & Gas UK to spotlight the benefits in terms of jobs and energy security to the country.
Meanwhile, the UK’s North Sea oil and gas reserves have also served as a political football for decades with different UK governments often accused of squandering the country’s North Sea resources, leading to the perception that the UK’s oil and gas supply is about to run out.
Even the current arguments about Scottish independence have provoked a view in the “No” camp that Scotland could not survive economically because its offshore hydrocarbon reserves have dwindled to a tiny amount. Certainly, many North Sea oil and gas fields are winding down production and this is leading to many job opportunities in decommissioning facilities and associated infrastructure that have serviced these fields.
In the North Sea, the decommissioning of some 600 oil and gas installations (470 of which are in UK waters) is projected to cost between £30 billion ($44.5 billion) and £35 billion ($52.2 billion) over the next three decades according to Decom North Sea. Tens of thousands of specialized workers will be needed by the decommissioning industry in order to carry out these plans.
In March 2013, the Royal Academy of Engineering warned that current figures indicate the UK will have a “major shortage” of workers skilled in decommissioning activities unless there is a significant increase in the numbers of engineering and technical students graduating from schools, colleges and universities. But in spite of a significant amount of decommissioning work on the horizon, the reality is that there is still plenty of life left in the UK North Sea oil and gas industry. And this has been confirmed by several major investments into North Sea projects in recent years.
Perhaps the biggest vote of confidence in the North Sea’s longevity is BP plc’s £4.5-billion ($6.7-billion) Clair Ridge project, which is designed to extend the life of the Clair field west of Shetland through the installation of additional fixed platforms over the field. BP believes this project has the potential to produce oil until mid-century, which was a fact Scottish Energy Minister (and Scottish nationalist politician) Fergus Ewing was keen to point out to Rigzone at Houston’s Offshore Technology Conference in May.
“The Clair field was actually discovered in 1977, and that’s ironic because we were told by London that the oil would run out in the 90s, and then in the 90s that it was going to run out in the Noughties,” Ewing said at the time.
BP itself cites Clair Ridge as a clear example of the company’s long-term commitment to the UK North Sea.
“The £4.5-billion Clair Ridge project is one example of ongoing investment in the UK,” BP’s North Sea Regional President Trevor Garlick told Rigzone in a recent statement. “The project will involve the construction and installation of two new bridge-linked platforms, scheduled to start production in 2016. The new development will be able to produce an estimated 640 million barrels of oil, extending production from Clair to 2050. Peak production is expected to be up to 120,000 barrels of oil per day.”
Garlick’s colleague Sue Adlam Hill, who is vice president of Human Resources for BP’s North Sea operations, added:
“BP employs 15,000 people in the UK, many of whom are based in the North Sea. Our investment in the region is currently at its highest level since the 1990s, reaching £2 billion last year alone. We still have high capital investments planned in a number of projects, so there will be jobs and opportunities for experienced and emerging professionals to develop their skills in the region for years to come.”
Indeed, BP is mindful of the need to develop the next generation of talent and recent years have seen the company launch a series of initiatives designed to encourage students to consider a career in oil and gas. For example, the company has established an Ultimate Field Trip competition that was originally targeted at just UK students (but which is now being extended to students in other countries), with the winning team awarded a two-week field trip at one of BP’s many sites around the world. Last November it also launched a £4.5-million ($6.75-million) scholarship program aimed at talented students studying science, technology, engineering and mathematics (STEM) subjects at nine selected UK universities; in the first year, 90 scholarships will be provided, each worth £5,000 ($7,500).
Of course, BP is not the only company taking an interest in the North Sea and nurturing new talent.
TAQA Bratani is a large independent oil firm that was set up by Abu Dhabi National Energy Company specifically to focus on the North Sea. Having acquired several fields, including paying £700 million ($1.1 billion) for central North Sea assets owned by BP in a deal announced in late 2012, the company’s activities support more than 2,500 people working both onshore and offshore.
Last year, TAQA announced it would be launching a graduate recruitment program – an unusual move for an independent oil company operating in the North Sea.
“The first intake will be in 2014 and so far we have four committed graduate opportunities for that and it may actually grow,” TAQA Talent Acquisition Manager David Priestley spoke to Rigzone in a recent interview, explaining that the company is taking a long-term view when it comes to making sure it has all the skills it needs to carry out its plans.
“We’re not building a short-term business that is just focused on the next three or four years and the reserves that are currently in place and just drawing those out. We see a longterm future and we don’t believe that just pilfering talent is a sustainable business model – not to say that we are not attracting talent from other companies as well.”
Indeed, at current rates of recruitment Priestley envisages TAQA recruiting around 120 positions for its North Sea operations during the next two years.
TAQA’s acquisitions since it set up operations in Aberdeen in 2006 – including its 2009 takeover of the Brent System of pipelines and facilities – show its confidence in the North Sea. But Priestley explained the reasons for the company’s involvement in the region are twofold.
“First and foremost is we see that we can still make money here. We wouldn’t be here [if we couldn’t] make money. The oil price is good, we have just increased our infrastructure base and we have future plans for that infrastructure base,” he said.
“But the other reason … is that we are growing a company that we see as having the potential to be a key international energy player and our political footprint naturally lends itself to major growth through the EMENA [Europe, Middle East and North Africa] region. And so, the secondary purpose of the investment was to build an offshore center of excellence that could be there to facilitate and assist with the offshore growth in the EMENA region.”
This fits with a general trend in which Scotland, and Aberdeen in particular, is seen as an important oilfield-services hub where talent can be found to make offshore projects work elsewhere in Europe and beyond. Exports by Scotland’s oil and gas supply chain sector now account for a record 47.6 percent of the sector’s total sales – which at £17.2 billion ($25.8 billion) grew by 5.8 percent in 2012, according to a report released by Scottish Development International earlier this year.
“It’s a hub. It’s about supply chain, it’s about the cluster, it’s about quality, it’s about access to engineering and it’s about access to academia,” David Rennie, International Sector Head for Oil and Gas at Scottish Enterprise, told Rigzone when we spoke to him in May.
“Subsea services, well management, drilling … There’s a whole range of things that can be serviced from Scotland. And we now export to about 100 countries … If you go anywhere in the world to look for oil, you will find a Scots person.”
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