I am very excited about the future of the oil & gas industry in the North Sea and internationally. The theme of this year’s SPE Offshore Europe conference is The next 50 years – but 50 years ago no-one could have predicted the way the UK oil & gas industry would develop or how we operate now, and future changes will be different from what forecasters are predicting now. It’s therefore extremely difficult to prophesize what the next 50 years will look like.
However we do know that there are lots of opportunities out there and we also know that these will be driven by the way companies operate as much as by the quality and breadth of the services they deliver. For example, wherever we operate in the world, we need to ensure that as an industry we put the safety of our people, and everyone we work with, as a top priority and that we are socially and ethically responsible.
With a rising global population and increasing GDP we face rising energy demand from economic output and improved standards of living which are likely to add ever increasing pressure on energy supplies. Growing demand, geopolitical pressures, accessing more remote and challenging resources will continue to change the global energy landscape. The geographical relationship between consumption and supply of energy can create local challenges and present opportunities, changing the way the industry operates.
There is increasing uncertainty and volatility over the balance of supply and demand in energy prices. This uncertainty is making it much more difficult for financiers to make large investments and this is affecting the economy and the industry.
According to Oil & Gas UK, over the next few years fresh investment in the North Sea should result in a boost of output from under 1.5MM bbls/d to 2MM bbls/d. Today’s high oil price and the extension of small-field allowances have helped the industry as new big finds are now less common. The UK Government’s brownfield allowance is encouraging smaller players to buy some of the older assets from the majors and guaranteed tax relief on decommissioning costs will help the industry with the cost of decommissioning aged assets, currently estimated at over £30 billion.
The emergence and development of unconventional hydrocarbon resources has resulted in a new resource and investment challenge, however, it is amazing how quickly this will be overcome within the industry. New techniques continue to be developed to turn raw hydrocarbons into high-value petroleum products.
The industry, geographically, is as wide open now than it has ever been, with markets such as shale gas and FLNG there are more changes ahead for all of us. It is a really exciting time to be a part of this industry. The development of shale gas and tight gas is a great opportunity for the industry. The market in the US is experiencing a remarkable transformation due to the rapid increase in supplies being produced from both tight oil and shale gas formations. The US is now moving from a net importer to a net exporter. Significant opportunities globally exist for these new developments. The successes in the US have now encouraged other countries to look into and develop shale gas reserves which would likely result in a stronger economic recovery across world markets.
We are facing an escalating skills gap across the industry around the world which will undoubtedly have an impact on expansion and growth plans, potentially affecting the price of energy at some point. We need to ensure that as an industry we have the right technical skills to achieve all the new projects which keep starting up globally. There is also a great opportunity for us to give high-quality career opportunities to people locally and we have a social and moral obligation to create employment for locals instead of flying expats in-country and generating revenue out of country
Bob Keiller is the keynote speaker in today’s SPE Offshore Europe opening plenary session, 10-11.30am, Fleming Auditorium.