Positivity prevails in North Sea downturn

Posted on February 19th 2016

by Duncan MacPherson

Earlier this month many media outlets reported on the affect the loss of 150 oil platforms could have on the UK North Sea in the next 10 years, it included a number of negative factors.

The report was based on findings published by industry analysts who predict various eventualities and forecast a bleak future for the industry in Scotland and beyond.

“At recent prices, one in seven barrels of oil being produced in UK waters is at a cash loss,” says consultancy, Wood Mackenzie.

Similarly, a report by Company Watch and commissioned by the Financial Times said: “…total losses for the past 12 months adding up to £6.4bn.”

Believe it or not though, it is not all doom and gloom – far from it actually.

There is an opportunity for firms to identify the most appropriate and cost-effective future to ensure that the process of decommissioning proves a success.

It presents an opportunity to offer employment to a vast amount  of skilled workers seeking a route in to the industry in the coming years, many of whom will inevitably have become victim to the job losses suffered due to the fall in oil prices.

The experience and skills gained by working in the oil and gas sector will prove invaluable and the necessary attributes required to be a success in decommissioning means that the 65,000 job losses to the sector since 2014 – reported by Oil and Gas UK – may not prove to be the end of the line after all.

It is widely accepted that the fall in prices has seen the beginning of the end for North Sea platforms, which isn’t entirely untrue, but a lot of have exceeded their lifespan in any case, thus providing decommissioning companies with lucrative opportunities as they look to explore the possibilities of removing vast amounts of infrastructure from the North Sea.

As the oil and gas sector in Scotland comes to terms with the collapse and the economic consequence, studies have concluded that there is an opening to look closely at the benefits a circular economy and re-use policy could have on the North Sea.

In a report published late last year by RSA, (Royal Society for the encouragement of Arts, Manufacturers and Commerce) it is said as well as an environmental benefit – citing the reduction on the impact of recycling and disposal of materials – adopting circular economy principles will also offer additional opportunities for supply chain companies.

The RSA believes too that the method could add up to £46bn to the Scottish economy and confirms that the creation of new jobs, skills and enterprise would be a very real prospect if a circular economy was to be followed through within the decommissioning industry.

The drive to maintain skills in the sector was underlined in April last year as the body representing the offshore decommissioning industry, Decom North Sea, signed up to the skills charter of the Engineering Construction Industry Training Board (ECITB). The move is evidence that there is a genuine appetite to underpin the potential that lies ahead for decommissioning.

As Scotland shifts focus on the potential that renewable energy technologies could offer now and in the future, it is only natural that attention could be drifting from the North Sea.

The decommissioning industry is sure to speed up that process as a growing number of installations in the North Sea come to the end of their production lives. With that though, comes opportunity and potential in what is sure to be an exciting new era.