OIL & Gas UK chief executive Deirdre Michie has underlined the need to capitalise on advances in technology to help the North Sea industry cope with the fall out from the plunge in oil prices since 2014.
Noting that firms have slashed activity in the North Sea and 120,000 jobs have been lost across the supply chain, Ms Michie said market conditions are likely to remain challenging for years.
With little prospect of the crude price returning to the $100 per barrel plus levels seen during the boom, the industry has to do all it can to boost efficiency.
“In trying to come to terms with the fundamental collapse in activity and job losses, we have had to move from hoping that the oil price would help us out of it to knowing that it needs to be our own actions that will play a key part in getting us through this lower for longer reality,” Ms Michie told Oil & Gas UK’s annual conference in Aberdeen.
Brent crude traded at around $49.30 per barrel yesterday. Growth in US supplies has weighed on prices in recent weeks.
Ms Michie said the powers of re-engineering and technology are being harnessed to help the North Sea compete for investment against other areas of the world.
For example the adoption of drones and cold pipe connections has helped firms slash the cost of developing and operating fields.
However, Ms Michie’s comments suggest resistance to change remains a problem in an industry in which competitive behaviours learned in better times may be getting in the way.
She noted sessions run by Oil & Gas UK have involved the trade body challenging the low take up of new technologies.
Scottish Enterprise has highlighted the support it has provided for a big increase in spending on innovation in the oil and gas sector as firms face the prospect of a long period of low crude prices.
The agency said it helped oil and gas firms invest £43 million in innovation in the latest year compared with £14.5m in the preceding year in a development officials said underlined the value of public funding.
“These are innovation projects that are happening in Scotland that simply would not have taken place if we didn’t support them,” said Maggie McGinlay, director of energy at Scottish Enterprise.
Ms McGinlay said the scale of the support provided by SE for innovation showed it was meeting its commitment to support the supply chain to invest in higher levels of innovation. It made this commitment through the Energy Jobs Taskforce, which was established in 2015 following a wave of lay offs in the North Sea.
Asked how many jobs the taskforce has helped to create, a Scottish Government spokesperson said the numbers could not be tracked. He noted: “As a result of the work of the Task Force, over 4,200 people have received help and advice through five Partnership Action for Continuing Employment (PACE) support events.”
The taskforce’s work led to the Scottish Government establishing the £12m Transition Training Fund, which has supported more than 2,000 individuals faced by redundancy within the oil and gas sector.
Scottish Enterprise provided £15.9m towards the £43m invested in qualifying projects in the year to 31 March. This helped 82 firms with work on a total of 111 projects.
Those supported included a £16 million Centre of Excellence for subsea development that TÜV SÜD is developing in East Kilbride.
SE provided £4.5m support towards the cost of 86 projects in the preceding year.
The agency has not evaluated the impact of the 86 projects.
It may take some time before any benefits arising from investment in innovation can be quantified.
An £180 million Oil and Gas Technology Centre was opened in Aberdeen in February. It is funded under the £250m Aberdeen city region deal, which is supported by the Scottish and UK governments.
The centre will work with industry and academia to help to boost efficiency in the North Sea and to maximise the recovery of the region’s resources.
SE also supports a separate Oil and Gas Innovation Centre, which links industry with universities.
Noting the progress made with efforts to cut costs in the North Sea, where some firms have acquired assets recently, Ms Michie said the industry was moving forward with cautious optimism.
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