Highlands port authority sees ‘green shoots’ of recovery in N. Sea exploration despite Big Oil exodus

Port of Cromarty Firth
Port of Cromarty Firth

Two years ago, when the price of crude dropped to less than $30-barrel, a dozen drilling rigs stood idle in the Cromarty Firth north of Inverness.

But yesterday the Cromarty Firth Port Authority (CFPA) reported the first “tentative” signs of a comeback.

The Maersk Innovator rig is back in operation to drill at least three development wells. Next month, the Maersk will begin work for Nexen Petroleum at the Buzzard platform – the UK’s largest producing oilfield.

A port spokesman said: “We have more rigs in for repair, inspection and maintenance, and we see this as a positive sign.

“It’s the first green shoots, tentative steps, but it’s positive against some negative stories around the North Sea. The number of jobs being created is a big shift for us and the biggest shift since 2010.”

The new work has boosted employment levels at the port with the workforce close to 1400 – almost double the level of last year.

Semco Maritime, lead engineering contractors on the Maersk rig, have hired four new engineers in the last six months.

Operations manager Neil Robertson said they had taken on more than 200 workers. He said: “It would be foolish to call it the start of an upturn but there are definite green shoots.”

Jobs are starting to return as well: currently, there are 1,400 people working at the Cromarty Firth port, up from half this number a year ago. Yet port authorities are wary of calling it an upturn. They are rather treating these developments as the “first green shoots” of a future recovery.

Also on the positive side, revenues and profits at Glasgow-based engineering giant Weir Group have risen sharply as its oil and gas division reported a 35% increase in orders.

Revenues in the first six months of this year climbed by 15% to more than £1 billion, while pre-tax profits from continuing operations rose by 38% to £143 million, compared to the same period in 2017.

The UK oil industry is overwhelmingly concentrated in Scotland, which meant the country was the hardest hit in the downturn.

After Brent crude oil price slumped from $115-barrel in 2014, Big Oil giants staged something close to an exodus from the North Sea during the downturn in search for higher-return, lower-cost opportunities.

These were replaced by private equity-backed newly set up energy independents that took over mature fields with the confidence that there is more oil and gas to be squeezed out of mature fields.

Chinese energy giants are also interested in North Sea oil and gas as local demand for fossil fuels booms – Nexen is now part of China’s CNOOC – yet activity and job creation seems to have stalled despite the change of field operators.

However, there are some more layoffs on the way: Conoco Phillips recently started implementing a layoff program at its Scottish unit as it halts production at several fields in the southern North Sea to refocus on its Alaskan business.

2 Aug 2018

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