N. Sea must become sustainable in $60-barrel world, warns new Oil & Gas UK chief

Oil barrel symbolThe head of Oil & Gas UK has today (Tues) warned that industry must become sustainable ‘in a world of $60-barrel oil’ if it is going to maximise recovery of the estimated 20-billion barrels of fuel still left n the N. Sea basin.

The rallying call by chief executive Deirdre Michie was made before an audience of over 500 people in Aberdeen at the opening of the leading trade association’s annual conference.

Nicola Sturgeon, First Minister of Scotland, and Andy Samuel, chief executive of the Oil and Gas Authority, also addressed the conference.

Deirdre Michie, UKOG
Deirdre Michie, UKOG

Michie said: “From Aberdeen to Anglesey, we have built an industrial powerhouse for the UK – the offshore oil and gas industry. In terms of our economic contribution and value to the country, this industry stands head and shoulders above the rest.

“We have paid more to the Treasury than most other industrial sectors, we generate hundreds of thousands of skilled jobs, we have a vibrant supply chain, at home and abroad, and make a key contribution to the UK’s security of energy supply. It is an industry that has grown and evolved for 50 years.

“However, we now face real and present threats that are challenging our future. At $60-barrel oil, 10% of our production is struggling to make money and there is a shortage of capital and a shortage of investors willing to place their money here. Our productivity as an industry has fallen rapidly.”

Over the last 20 years, the price has averaged $62-barrel and the forward curve is between $65 and $75-barrel. Michie added: “To succeed with this approach, we have to be open to change. We must avoid doing the same things in the same way and expecting a different outcome.

“Learning from our mistakes, we know that our focus cannot merely be on ‘cutting costs’, but must more fundamentally address the efficiency of the basin. Focusing on efficiency means that, if or when the oil price bounces back, we will be best placed to seize new opportunities”.

She highlighted recent efficiency improvements gained made by Total and Nexen through engaging with the workforce to help drive positive change and added:

“In order to be successful in the future, we too must raise the bar in terms of co-operating. We must work together to secure the future of this industry – for this country. There is a role for everyone – client, customer, employer and employee.  For unions, for governments, for regulators and for trade associations.  

“This is not a time for conflict or entrenched positions. We don’t need to wait for consensus, but we do need leadership in this industry to drive co-operation and an ‘early adopter’ culture from companies willing to rise to the challenge.” 

“With more than 20 billion barrels of N. Sea oil and gas still to play for.”

As Michie was speaking, more than 850 worried workers attended a jobs fair in Aberdeen aimed at helping workers facing redundancy from the N. Sea oil and gas sector.

Alexander Mair from Aberdeen was among those who attended the event in search of a job. He said: “Being unemployed has been really tough, I’ve handed my CV in to a number of recruitment agencies but haven’t had any luck.

“This jobs fair has been a really good way to meet employers and gave me an opportunity to present myself to them rather than relying on sending CVs in the hope they’ll read them.”

Tracey Stewart, who was made redundant from her job in business travel for the oil and gas sector, was also at the event and sought advice for the support agencies in attendance.

Tracey, from Aberdeen, said: “Everyone at the event was really helpful, from the recruitment agencies to the advisers I spoke to about my CV. I feel positive after coming along today, I’ve got a lot of transferrable skills and I’m open to new job opportunities so I hope to find another job soon.”

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