ABERDEEN, UK – The North Sea oil and gas industry is experiencing a tumultuous time, with more than 5,000 jobs lost in the sector from January to March of this year, and government revenues plunging more than 75% to $255 million, according to the UK’s Oil and Gas Authority (OGA).
The head of OGA said that “whole areas of the continental shelf” could be shut down if critical infrastructure is decommissioned too soon while major projects are being abandoned as energy firms put off projects due to the oil price slump, the agency noted.
More than $200 billion in spending on 46 major oil and gas projects has been put on hold due to the downturn, energy consultancy Wood Mackenzie reported in July. Moreover, Shell cut 6,500 jobs and reduced capital spending by 20%. BP lowered its expected full-year capital spending to below $20 billion after cutting it by 13% earlier this year.
Tax breaks have been offered by the UK government, but many within the industry have been urged to work together, to sustain this vital market to the North Sea.
During this time, operators can learn a huge amount from suppliers, remarked Bernard Looney, BP’s vice president of Development, at his luncheon discussion opening day of Offshore Europe 2015. The three trends worth noting, he added, are:
- Step 1 – Learn from each other
- Step 2 – Look to the future
- Step 3 – Embrace the innovation.
Looney added that the government must keep improving regulation of the North Sea, drive down taxes and continue with support measures such as decommissioning, investment, and exploration allowances. The industry also has a responsibility to reduce costs and maximize efficiency, he noted, but the focus can’t be just on cutting costs. The industry must focus on efficiency, first. And it must be done differently from years past.
The North Sea “has led the way of offshore technology, especially in subsea development, but it must think differently to catch up to other industries that focus on technological innovation,” he said.
Looney noted, the great crew change is a real concern to the oil and gas industry, and in order to attract the digital generation, “we must change our mindset in order to attract and retain.” Just a year ago, WTI was over $100/bbl, not forcing oil and gas companies to update products and tools when compared to other industries where the pace of technology adoption is widespread.
Even though the industry is rooted in innovation, the expectation of innovation does not seem to be as strong as it was in the early days.
So how does the industry attract the younger generation, Looney asked? “We need to emphasize that this is not a sunset industry, but a fast-paced, technological advanced industry that is both exciting and evolving. We need to state how proud we are to work for this industry and how rewarding it is for all involved.”