Wilson
government issuing
167 new oil and gas
licences to companies
looking to drill in the
North Sea attracting 224 applications,
the industry is set for renewed activity
in 2013. Tax allowances also appear to
be playing a part in unlocking billions of
pounds of investment in mature fields,
creating an expectation of increased
business for many suppliers to the oil
and gas sector in 2013 and beyond.
barrels of oil remain to be extracted
from the North Sea.
industry may not only extend the
productive economic life of North Sea
fields once thought past their prime, but
may also create a surge in demand for
equipment and labour that are already
in short supply. There are four key points
to consider for 2013:
continental shelf has been in decline for
years, but its enormous contribution to
the UK economy is expected to continue
for many more years provided
investment is not hindered by over
taxation. The recent announcement by
the government to create tax
allowances for mature fields is merely
redressing the negative impact of the
Treasury's earlier hike in marginal tax
rates for companies operating in the
North Sea - which in some cases were as
high as 81%. Figures from Oil and Gas
UK indicate that the industry paid £11.2
billion in corporate taxes on production
in 2011-12, almost 25 per cent of total
corporation taxes received by the
Exchequer. Hopefully, the government's
decision to introduce allowances will tip
the balance and spark a renewed vigour
in the industry for investing in mature
fields.
per barrel are rising. To stay competitive
in a volatile global energy market,
operators are going to have to keep
costs as low as possible. However,
availability of specialist mobile
equipment such as drilling rigs, pipe
laying vessels and heavy lift barges are
in demand the world over so there
may be longer-term contracts on offer in
other parts of the world that are more
attractive. Once such heavy and slow
moving pieces of kit have transferred to
other areas of the globe, getting them
back again is not so easy.
building a new drilling rig, planning and
investment has to be geared to a long-
term vision something that may be
difficult to achieve with mature fields
and volatile oil and gas markets. With
ageing infrastructure supporting
extraction, costs of maintenance will
continue to rise. Clearly, a new way of
thinking will be required to cost-
effectively extend the life of equipment.
towards greater collaboration on
sharing drilling rigs and other assets,
perhaps creating collaborative
arrangements between two or three
competitors. We may well see creative
initiatives of this nature on the rise next
year and in the years to come.
experienced oil and gas people and this
will be an ongoing problem in 2013. The
shortage of labour resources may well
act as a constraint on the renewed
interest in exploiting mature fields.
Although experience is always in high
demand, there is also a need to
encourage young people into the
industry. More apprenticeships will be
called for next year as operators and
suppliers respond to the expected
increase in investment to the sector. The
demand for high calibre engineering
graduates is very strong, particularly in
the burgeoning subsea industry in which
the UK has renowned expertise. But
perception of the industry also needs to
change moving away from an industry
that in the past have lead to volatile jobs
markets. As an industry that has a
reputation for paying reasonably well,
when compared to other sectors, 2013
should be a year for encouraging the
young to engage with the industry
through exciting apprenticeship and
career opportunities.
cultural history of collaboration, born
from the unique challenges of the harsh
environment, the pioneering technology
and demands of deep-sea drilling.
Initiatives on Health & Safety, sharing of
resources such as helicopters, and CRINE
- the cost reduction initiative for the
New Era have proved that
collaboration works in the industry,
creating value by sharing resources and
costs. Collaborative communities will be
the way forward in 2013 as the industry
identifies the clear advantages from
sharing resources - such as rigs and
vessels - and work towards creating
closer relationships with suppliers and
competitors alike.
stimulate investment, rather than retard
it, and initiatives to attract the best
young talent to join the industry are