Britain’s North Sea oil and gas industry is in its greatest shape for half a decade, according to a report that predicts up to 16 developments will get the go-ahead this year. The report from Oil & Gas UK, an industry group, also says that the industry has drawn positives from the harsh economy of the past few years by becoming leaner and more efficient.
2018 started promisingly for the North Sea basin, with major discoveries and investments from some of the biggest players, and Oil & Gas UK’s Business Outlook 2018 predicts that the trend will continue. The greenfield and major brownfield developments, set to be approved this year, could yield more than 450 million barrels of oil and gas over time which the trade body says is good news underpinning the production outlook.
After several years of stuttering oil prices and scaled back production in UK waters, the positive outlook offers hope of a boost for an industry that provides work for over 300,000 Brits. Oil & Gas UK’s chief executive Deirdre Michie says that the downturn has, in part, made this boom possible. “More projects are taking place and investment is happening because of the sweeping changes made to adapt to the challenging business climate. This has helped make the UKCS one of the most attractive mature basins in the world in which to do business and we will continue to work hard to maintain our competitive advantage,” she said.
As would be expected it is not only frontline exploration and extraction enterprises that are seeing the impact of the new optimism. The report suggests that supply chain companies for the industry are seeing increased investment too, with more fresh capital than at any time since 2014. The revival is still taking some time to work through though, and Ms Michie is keen that the industry should acknowledge this: “We must recognise that many areas of the supply chain are still struggling with the impact of the downturn and have yet to benefit from any upturn in activity,” she warns. Nor can the industry rest on its laurels, the report warns that increased exploration is needed if the UK continental shelf is to hit its true capacity.
Of course, the boom will come as welcome news for oil and gas professionals who have struggled to find work through the downturn. The report highlights that job prospects are on the up, with more than half of companies expecting to increase their workforce. It seems that the offshore industry is not exempt from the UK’s engineering and tech skills gap however, as many companies are reporting difficulties in finding the right skills and abilities.
Despite some of the challenges identified, the industry seems set for a successful few years. Ms Michie is confident that even as use of fossil fuels dwindles, the North Sea still has a role to play: “As we move to a lower-carbon economy, the UK needs to meet as much of its domestic demand for oil and gas from indigenous resources as possible. This will ensure security of supply, generate revenue for the Exchequer, support the supply chain and sustain hundreds of thousands of highly-skilled UK jobs. The energy market is changing but we will remain relevant for many decades to come.”