The North Sea region has long been an important part of the oil and gas industry. Despite having a mixed year in 2013, there was also no shortage of good news. Reasons for positivity include several large investments, UK zone tax relief measures and huge development projects like the £4 billion Kraken field off the Shetland Islands. With these events in mind, this article will provide an overview of the North Sea’s possibilities in 2014, including the year’s early news and informed predictions.
While September’s impending Scottish Independence referendum could provoke some uncertainty around the future of North Sea developments, both sides rightly value the North Sea. Whether Alex Salmond achieves independence and adopts an approach similar to Norwegian Oil operations or Scotland remains in the UK, the result will likely be investment- a shift in focus rather than any major overhaul.
The recently published Wood review suggests the UK proposal could garner a potential £200 billion boost to the economy. With the UK firmly in mind, the report stresses the significance of a union’s ability to absorb price shocks that could shock a small country’s budget. Salmond counters that the new powers over energy regulation that would be adopted by an independent Scotland could result in a boost to the energy industry and their wider economy. Whatever the outcome of the referendum, it is safe to say that the region will continue its development.
Oil and gas discoveries and predicted investment
While the year is still young, there has already been a big announcement by Norwegian company Statoil, who will have been glad to see the back of 2013. It was only in November when they had to announce the delay of their Bressay development, but not even one full month into 2014 the company’s fortunes appear to have turned. It announced the discovery of two separate sites in the North Sea, with the predicted quantity of recoverable oil coming in at 19 - 44 million bbls.
The outlook is equally positive in terms of investments according to energy sector consultants Wood Mackenzie. The company recently forecast a capital investment of £21.3 billion over 2013 and 2014 in its UK oil and gas review. On top of this, Wood Mackenzie anticipates 14 new fields, capable of producing up to 438 million bbls of oil, will be brought on stream this year. These figures and other predictions are discussed in the following Telegraph article.
The aforementioned tax breaks and investments will encourage growth, but the following demand for skilled professionals will have its own difficulty. Oil and gas recruitment consultants Earthstaff have acknowledged the well-documented ageing workforce, identifying investment in talent as a major priority for the industry.
UK and Norwegian focused Senior Oil & Gas Consultant, John Borge, had the following to say: “The oil and gas firms who operate in the area must invest in the industries future. An ageing workforce means they need to develop and nurture young talent in order to provide qualified professionals to do the work in the area which is seeing a lot of investment.” Investment is likely to dry up if the next generation of workers are unequipped and short-staffed.
The requirement for young talent to be developed is particularly pressing within the sector. Recent research by oilandgaspeople.com suggests that 44% of the workforce is older than 45. This extraordinary percentage is being targeted specifically by oil companies, who have raised salaries in order to attract not only up-and-comers, but established industry experts.
When it comes to specific role demand within the sector, Earthstaff’s Business Development Manager, Frances Chang, had several observations. Noting the pending investments, he positions 2014 as a pivotal year to the future of the North Sea: “[…] firms need to be on the hunt for highly skilled professionals to fulfill the projects that the investments are creating”.
Chang also suggests that engineers will be most in demand. This assumption is made in correlation with industry research, which found 65% of North Sea based companies require more project engineers. If top talent can get competitive salaries in the North Sea region, perhaps they won’t be enticed abroad as easily. The recruitment and retention of top-tier experts is essential to the North Sea’s performance going forward.
All things considered, there is much cause for positivity within the North Sea oil and gas zone. With expected investments, as well as breaking and future discoveries driving demand, there’s a gap in the market for young, ambitious talent as the region solidifies its central status within the industry.
Edited by Callum O'Reilly
Read the article online at: https://www.hydrocarbonengineering.com/special-reports/27022014/the_north_sea_making_waves_in_2014/