Dominic Simpson, Rigzone, UK, reviews the developments in the UK oil and gas industry and the challenges ahead for the industry.
After two years of deliberation, George Osborne, the British Chancellor of the Exchequer, finally gave clarity in this year’s March Budget on what tax incentives would be made available to help the majors tackle the thorny issue of decommissioning the ageing rigs and pipelines of the North Sea. At the same time, the Government signalled its support to the nascent hydraulic fracturing industry in the UK after an effective 18 month halt on the process following the initial tremors originally caused near Blackpool by the process in April 2011.
Since the Budget bonanza, the industry has been lapping up the expectations of what these two initiatives could mean to Scotland and Britain’s recovering economies.
The industry lobby group, Oil & Gas UK, and Scottish Minister for Energy Fergus Ewing, set the scene at the end of last year by suggesting that between 15 billion to 24 billion barrels of oil equivalent could be viewed recoverable from the UK’s continental shelf. While in quantity terms this might only be around half of the 41 billion bbl that have already been brought ashore since the 1970s, in price terms this could be worth £48 billion over the next six years alone according to the Scottish government. In an article published by the Financial Times in June this year, Alex Salmond, Scotland’s first minister and a former energy economist, repeated the message “More than half of the value of the North Sea’s oil and gas reserves has yet to be extracted”. An industry that was in decline has been given a renewed lease of life.
And the same hydraulic fracturing and horizontal drilling techniques that will potentially come into play to help release the as yet unlocked reserves of the North Sea are being tipped to herald a shale gas boom on mainland Britain that some believe could lead to the same abundance of low-cost energy that has been experienced in the US where the cost of natural gas has effectively dropped by over 50% since 2007 according to US Bureau of Labor Statistics. Indeed, according to the US Energy Information Administration, shale based extraction accounted for 40% of natural gas and 29% of oil and production in the US in 2012.
The UK speculation reached new heights in early June when IGas, one of the UK’s leading shale explorers, significantly restated its potential reserves on its license areas suggesting there may be up to 170 trillion ft3 of gas within its properties mirroring the 200 trillion ft3 claim made by Cuadrilla for its UK licences in the Bowland Basin. The numbers are simply staggering given UK currently consumes around 3 trillion ft3 of gas a year and 1.5 million bpd. And whilst analysts might debate what percentage of the reserves may be economically recoverable - all the signs currently point to the potential surfeit of affordable energy in the UK.
But what does this wave of apparent good news mean in employment terms for the industry and are the skill pools in place to cope with the anticipated uplift given PWC and other industry watchers have suggested up to 120 000 new jobs will need be filled over the next 10 years by the industry?
Part 2 of this article is available to read here.
Adapted by David Bizley
Read the article online at: https://www.oilfieldtechnology.com/exploration/14102013/gearing_up_for_the_employment_wave_part_1/