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Offshore Europe 2013. Reflections

Offshore Europe 2013. Reflections

Jamie Stark

Last week saw Offshore Europe burst into Aberdeen.  A biennial event, showcasing the latest technologies in the oil & gas industry and underlining Aberdeen’s status as one of the World Energy Cities.

On Wednesday night, Burness Paull hosted a party to share in the city’s success.  Conversations resonating around the room had a common theme.  Aberdeen has its challenges but there is huge optimism and the city’s contribution to the economy is impressive.

The prelude to the week was quite dreadful.  Barely two weeks ago, an offshore helicopter accident led to the death of four industry workers.  This served as a salutary reminder of the challenging risks that permeate the industry and the paramount importance of making health and safety the industry’s number one priority.

The future for the UK’s oil & gas industry has never looked stronger.  That is the message coming out of Aberdeen.

And why so?  Well, first off, there are some pretty serious new oil fields being developed.  Take Statoil’s Mariner field. US $7 billion will be invested to develop a field that was discovered some thirty years ago but it is only today that we have the technologies and derring do to tackle its massive heavy oil reserves.

Add to that the extended life of existing producing assets and the willingness to commit significant investment to new exploration.  Testament to this is that the Government’s most recent round of licensing of new blocks for exploration and development was the most successful ever.

And the UK government is finally getting its act together, in no small part through pressure from Oil & Gas UK, the industry’s highly effective trade association.  Now we have a raft of new tax incentives to promote further investment in existing producing assets, so called Brownfield sites, and also concrete plans to set in stone the tax breaks for decommissioning.

All of which means the UK’s oil & gas industry is an increasingly attractive place to do business.

This is a global industry.  We export our expertise worldwide.  It’s a success story.  And in terms of inward investment, we do now seem to be holding our own.

But of course, we heard talk of the challenges.

There is continuing pressure for innovation to exploit known resources and to allow for further successful exploration.

And the lack of skilled human resource.  We face the consequences of having failed to promote the opportunities offered by the industry to our next generation.  Contrast this with Norway’s success in investing  in engineering and science at a grass roots level in schools and the positive effect that has had on industry.

News reports last week reported the need to attract more women into the sector.  Again we have lessons to learn from Norway, where there is greater emphasis on shared family responsibilities and a meaningful work life balance.  We are making steps to improve but there will need to be stronger political will to accelerate this change.

And as a city, Aberdeen  faces its own challenges if it is to retain its premier status as an energy hub.  Businesses and people need to be accommodated; this means we need more industrial estates, more office space, more houses, more schools.  The list is long.

So the oil & gas industry certainly has a promising future.  It’s not without its challenges but its contribution to our economy is right up there and we look forward to being part of its success.

Jamie Stark
Partner

LChalmers